As filed with the Securities and Exchange Commission on October 6, 1997
Registration No. 333-35761
============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HOLLINGER INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3518892
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
(312) 321-3000
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
Kenneth L. Serota
Vice President - Law and Finance
and Secretary
HOLLINGER INTERNATIONAL INC.
401 North Wabash Avenue
Chicago, Illinois 60611
(312) 321-2299
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
William P. Rogers, Jr.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
Approximate date of commencement of proposed sale to public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
---------------------------
<TABLE>
<CAPTION>
CALCULATION OF ADDITIONAL REGISTRATION FEE
Proposed Proposed Maximum
Title of Each Class of Amount to Be Maximum Offering Aggregate Amount of
Securities to Be Registered Registered(1) Price per Share Offering Price(2) Registration Fee(2)
<S> <C> <C> <C> <C>
Class A Common Stock, par 34,899,639 N/A $458,232,265 $138,858
value $.01 per share......
========================== ============= ================ ================= ======================
</TABLE>
(1) The number of shares is based upon the maximum number shares that may
be issued upon the exercise of the retraction right and exchange
rights provided under the Retractable Shares and the Series I and
Series II Preference Shares. This registration statement also
registers such indefinite number of additional shares, if any, as may
be issued upon the exercise of the Retraction Right or Exchange Right
provided under the Series I and Series II Preference Shares.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c). Computed on the basis of the market price of the
Class A Common Stock.
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
==============================================================================
<PAGE>
HOLLINGER INTERNATIONAL INC.
CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
---------------------------
This prospectus covers the exchange by Hollinger Inc., a Canadian
Company ("Hollinger Inc.") of shares of Class A Common Stock, par value
$.01 per share (the "Class A Common Stock"), of its subsidiary Hollinger
International Inc. (the "Company") upon the exercise by holders of the
Retractable Shares and Series I and Series II Exchangeable Non-Voting
Preference Shares (the "Series I and Series II Preference Shares") of
Hollinger Inc. of the retraction rights provided under these securities.
See "Plan of Distribution". The Company will not receive any proceeds from
the exchange of the Class A Common Stock covered by this prospectus.
The Class A Common Stock is listed on the New York Stock Exchange (the
"NYSE") and traded under the symbol "HLR." The last sale price of the Class
A Common Stock as reported on the NYSE Composite Tape on October 3, 1997
was $13.88 per share.
---------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OR CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN
THE CLASS A COMMON STOCK.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL
OFFENSE.
As described herein, the number of shares of Class A Common Stock, if
any, to be exchanged for each Retractable Share or Series I or Series II
Preference Shares surrendered will be determined based on the applicable
Retraction Price and the Current Class A Market Price in effect at such
time see "Plan of Distribution."
---------------------------
The date of this Prospectus is October 6, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy solicitation materials
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy solicitation materials and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices located at
Seven World Trade Center, Suite 1300, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the Commission. The address of the Commission's
Web site is http://www.sec.gov. The Class A Common Stock is listed on the
NYSE. Such reports, proxy solicitation materials and other information can
also be inspected and copied at the NYSE at 20 Broad Street, New York, New
York 10005.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as
the "Registration Statement") under the Securities Act with respect to the
offering made hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of
which are omitted in accordance with the rules and regulations of the
Commission. Such additional information may be obtained from the
Commission's principal office in Washington, D.C. as set forth above. For
further information, reference is hereby made to the Registration
Statement, including the exhibits filed as a part thereof or otherwise
incorporated herein. Statements made in this Prospectus as to the contents
of any documents referred to are not necessarily complete, and in each
instance reference is made to such exhibit for a more complete description
and each such statement is modified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 0-24004) pursuant to the Exchange Act are incorporated herein by
reference:
1. the Company's Annual Report on Form 10-K for the year ended December
31, 1996;
2. the Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997;
3. the Company's Current Reports on Form 8-K dated May 5, 1997; and July
14, 1997; and
4. the description of the Class A Common Stock contained in the
Company's Registration Statement on Form 8-A dated May 2, 1994, as
the same may be amended from time to time.
All reports and other documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering made
by this Prospectus shall be deemed to be incorporated by reference herein.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents that are incorporated herein
by reference, other than exhibits to such information (unless such exhibits
are specifically incorporated by reference into such documents). Requests
should be directed to Hollinger International Inc., 401 North Wabash
Avenue, Chicago, Illinois 60611, Attention: Secretary, telephone number
(312) 321-2299.
<PAGE>
THE COMPANY
The Company, through subsidiaries and affiliated companies, is a
leading publisher of English-language newspapers in the United States, the
United Kingdom, Australia, Canada and Israel. Included among the paid daily
newspapers which the Company owns or has an interest are the Chicago
Sun-Times and The Daily Telegraph. In addition, the Company owns or has an
interest in several hundred non-daily newspapers as well as magazines and
other publications principally in small and medium sized communities in the
United States. The Company's strategy is to achieve growth through
acquisitions and improvements in the cash flow and profitability of its
newspapers, principally through cost reductions.
The Company was incorporated in the State of Delaware on December 28,
1990 and is the successor to a business that was formed through
acquisitions in 1986. Its executive offices are located at 401 North Wabash
Avenue, Chicago, Illinois 60611, telephone number (312) 321-3000.
References herein to the "Company" refer to Hollinger International Inc.
and its subsidiaries, unless the context requires otherwise.
RISK FACTORS
Prospective investors should carefully consider the following factors
relating to the business of the Company, together with the other factors,
information and financial data included or incorporated by reference in
this Prospectus, before acquiring any of the shares of Class A Common Stock
offered hereby.
International Holding Company Structure
The Company is an international holding company and its assets consist
solely of investments in its subsidiaries and affiliated companies. As a
result, the Company's ability to meet its future financial obligations is
dependent upon the availability of cash flows from its United States and
foreign subsidiaries and affiliated companies (subject to applicable
withholding taxes) through dividends, intercompany advances, management
fees and other payments. Similarly, the Company's ability to pay dividends
on its Common Stock, its preferred stock or its Preferred Redeemable
Increased Dividend Equity Security PRIDES(SM) ("PRIDES") will be limited as
a result of its dependence upon the distribution of earnings of its
subsidiaries and affiliated companies. The Company's subsidiaries and
affiliated companies are under no obligation to pay dividends and, in the
case of Hollinger International Publishing Inc., a Delaware corporation and
a wholly owned subsidiary of the Company through which the Company holds
all the shares of its other subsidiaries ("Publishing"), and its principal
United States and foreign subsidiaries, are subject to statutory
restrictions and restrictions in debt agreements that may limit their
ability to pay dividends. Substantially all of the shares of the
subsidiaries of the Company have been pledged to lenders of the Company.
The Company's right to participate in the distribution of assets of any
subsidiary or affiliated company upon its liquidation or reorganization
will be subject to the prior claims of the creditors of such subsidiary or
affiliated company, including trade creditors, except to the extent that
the Company may itself be a creditor with recognized claims against such
subsidiary or affiliated company.
Risks Inherent in Growth Strategy
The Company's strategy is to achieve growth through acquisitions and
improvements in the cash flow and profitability of its newspapers,
principally through cost reductions. The Company's growth strategy presents
risks inherent in assessing the value, strengths and weaknesses of
acquisition opportunities, in evaluating the costs of new growth
opportunities at existing operations and in managing the numerous
publications it has acquired and improving their operating efficiency.
While the Company believes that there are significant numbers of potential
acquisition candidates, the Company is unable to predict the number or
timing of future acquisition opportunities or whether any such
opportunities will meet the Company's acquisition criteria or, if such
acquisitions occur, whether the Company will be able to achieve improved
operating efficiencies or enhanced profitability. Accordingly, there can be
no assurance that the Company will continue to experience the rate of
growth that it has had in the past. In addition, the Company's acquisition
strategy is largely dependent on the Company's ability to obtain additional
debt or other financing on acceptable terms.
Newspaper Industry Competition
Revenues in the newspaper industry are dependant primarily upon
advertising revenues and paid circulation. Competition for advertising and
circulation revenues comes from local and regional newspapers, radio,
broadcast and cable television, direct mail, and other communications and
advertising media that
<PAGE>
operate in the Company's markets. The extent and nature of such competition
is, in large part, determined by the location and demographics of the
markets and the number of media alternatives in those markets. Some of the
Company's competitors are larger and have greater financial resources than
the Company. For example, in the Chicago metropolitan area, the Chicago
Sun-Times competes with a large established metropolitan daily and Sunday
newspaper that is the fifth largest metropolitan daily and Sunday newspaper
in the United States such competition is often intense. In the United
Kingdom, The Daily Telegraph competes with other national newspapers,
principally The Times, which over the past several years has from time to
time substantially reduced its cover price in an effort to increase its
circulation. The Daily Telegraph has met this competition and has from time
to time engaged in its own price reduction or promotional initiatives.
These competitive activities can and have from time to time had an adverse
effect on revenues and operating costs.
Cyclicality of Revenues
Advertising and, to a lesser extent, circulation revenues of the
Company, as well as those of the newspaper industry in general, are
cyclical and dependent upon general economic conditions. Historically,
increases in advertising revenues have corresponded with economic
recoveries while decreases, as well as changes in the mix of advertising,
have corresponded with general economic downturns and regional and local
economic recessions. The Company believes, however, that the geographic
diversity of its global operations may mitigate, to some degree, the
effects of an economic downturn in any particular market served by the
Company.
Newsprint Costs
Newsprint represents the single largest raw material expense of the
Company's newspapers throughout the world and is one of its most
significant operating costs. Newsprint costs are cyclical and vary widely
period to period. For example, Newsprint cost increased approximately 40%
per metric ton in 1995 on an industry-wide basis, and the average cost per
metric ton of newsprint was substantially higher in the first half of 1996
than in the first half of 1995. However, Newsprint costs decreased
significantly in the second half of 1996 and have continued to decline
through the second quarter of 1997. Although the Company has implemented
measures in an attempt to offset a rise in newsprint prices, such as
reducing page width and managing its return policy, price increases have
had an adverse effect on the Company's results of operations. The Company
has no effective ability to use long term fixed price newsprint supply
contracts to hedge its exposure to price fluctuations.
Foreign Operations and Currency Exchange Rates
Operations outside of the United States accounted for approximately
67% of the Company's operating revenues and approximately 50% of the
Company's operating income for the year ended December 31, 1996. In
general, the Company does not hedge against foreign currency exchange rate
risks. As a result, the Company may experience economic loss and a negative
impact on earnings with respect to its investments and on dividends from
its foreign subsidiaries, solely as a result of currency exchange rate
fluctuations.
Control by Hollinger Inc.
The Company has outstanding two classes of common stock, Class A
Common Stock and Class B Common Stock, par value $.01 per shares (the
"Class B Common Shares" and collectively the "Common Stock"). Hollinger
Inc. owns approximately 59.8% of the Common Stock of the Company and
approximately 84.3% of the combined voting power of the outstanding Common
Stock (without giving effect to the issuance of shares of Class A Common
Stock upon conversion of preferred stock including the PRIDES or the
exchange of the Non-Voting Special Shares) and 50.5% and 77.1%,
respectively, upon the issuance of up to approximately 20,700,000 Shares of
Class A Common Stock in connection with the PRIDES and upon exchange of all
the Non-Voting Special Shares (without giving effect to the issuance of
Shares of Class A Common Stock upon conversion of any other outstanding
series of preferred stock.)
As a result, Hollinger Inc. is in a position to control the outcome of
substantially all actions requiring stockholder approval, including the
election of the entire Board of Directors. The retention by Hollinger Inc.
of securities representing more than 50% of the voting power of the
Company's outstanding Common Stock will preclude any acquisition of control
of the Company not favored by Hollinger Inc. Subject to the fiduciary
responsibilities of the directors of the Company to all stockholders and
the terms of agreements defining the ongoing relationships between
Hollinger Inc. and the Company, Hollinger Inc., through its ability to
control the outcome of any election of directors, will continue to be able
to direct management policy, strategic
<PAGE>
direction and financial decisions of the Company. Hollinger Inc. is effectively
controlled by Mr. Conrad M. Black, Chairman of the Board and Chief Executive
Officer of Hollinger Inc. and the Company, through his direct and indirect
ownership and control of Hollinger Inc.'s securities. Mr. Black has advised the
Company that Hollinger Inc. does not presently intend to reduce its voting
power in the Company's outstanding Common Stock to less than 50%. Furthermore,
Mr. Black has advised the Company that he does not presently intend to reduce
his voting control over Hollinger Inc. such that a third party would be able to
exercise effective control over it.
The Class A Common Stock held by Hollinger Inc. is pledged to certain
lenders of Hollinger Inc. In addition, the stock of certain subsidiaries of
the Company have been pledged to secure borrowings by the Company's
subsidiaries. A default by any of such borrower under their outstanding
debt instruments would entitle the lenders thereunder to foreclose on
shares of Class A Common Stock or Subsidiary Stock pledged to such lenders.
Any such foreclose sale could result in (i) a change in control of the
company or one or more of its principal subsidiaries, (ii) a default under
or acceleration of other debts instruments, or both.
Dividend Policy
The Company has paid quarterly dividends on its Common Stock since the
third quarter of 1994. The quarterly dividend was previously $0.025 per
share of Common Stock and was increased to $0.10 per share of Common Stock
in the first quarter of 1996. As an international holding company, the
Company's ability to declare and pay dividends in the future with respect
to its Common Stock will be dependent, among other factors, upon its
results of operations, financial condition and cash requirements, the
ability of its United States and foreign subsidiaries to pay dividends and
make other payments to the Company under applicable law and subject to
restrictions contained in existing and future loan agreements, the prior
payment of dividends to holders of outstanding preferred stock, including
the PRIDES, the preference share terms and other financing obligations to
third parties relating to such United States or foreign subsidiaries or the
Company, as well as foreign and United States tax liabilities with respect
to dividends and other payments from those entities. See "International
Holding Company Structure," "Restrictions in Debt Agreements" and "Other
Restrictive Agreements" above.
Potential Conflicts of Interest
The Company and Hollinger Inc. have entered into agreements for the
purpose of defining their ongoing relationships, including a Services
Agreement and a Business Opportunities Agreement. These agreements were
developed in the context of a parent-subsidiary relationship and,
therefore, were not the result of arms-length negotiations between
independent parties.
Services Agreement. The Services Agreement governs the provision by
Hollinger Inc. of certain advisory, consultative, procurement and
administrative services to the Company. The Services Agreement also
contemplates that the Company may provide services to Hollinger Inc. The
services to be provided pursuant to the Services Agreement include, among
other things, strategic advice and planning and financial services
(including advice and assistance with respect to acquisitions); assistance
in operational matters; participation in group insurance programs; and
guarantees of indebtedness of the Company or other forms of credit
enhancements. The party receiving the services will reimburse the party
rendering the services for its allocable costs in providing those services,
as determined by the provider thereof or, in the case of a guarantee, for
an amount equal to the cost to the party of obtaining a bank letter of
credit in the amount of such guarantee. The party allocating its costs will
consider the salaries or other compensation payable to directors, officers
and employees actually providing services, out-of-pocket costs, the cost of
obtaining substantially equivalent services from a third party and other
factors as may be deemed appropriate. The Services Agreement will be in
effect for so long as Hollinger Inc. holds at least 50% of the voting power
of the Company, subject to termination by either party under certain
specified circumstances. Payments made pursuant to the Services Agreement
are subject to the review and approval of the Audit Committee of the Board
of Directors of the Company.
In addition, Hollinger Inc. and The Telegraph are parties to a
separate services agreement under which The Telegraph bears two-thirds of
the cost of the office of the Chairman incurred by Hollinger Inc. as long
as Mr. Black remains Chairman of the Board of The Telegraph, and requires
that other services will be provided at cost, including the arrangement of
insurance, assistance in the arrangement of financing and assistance and
advice on acquisitions, dispositions and joint venture arrangements.
Hollinger Inc. has assigned its rights and obligations under The Telegraph
services agreement to the Company and Publishing on May 9, 1996 with the
consent of The Telegraph.
<PAGE>
Business Opportunities. The Business Opportunities Agreement provides
that the Company will be Hollinger Inc.'s principal vehicle for engaging in
and effecting acquisitions in newspaper businesses and in related media
businesses in the United States, Israel and, through The Telegraph, the
European Community, Australia and New Zealand (the "Telegraph Territory").
Hollinger Inc. has reserved to itself the ability to pursue newspaper and
all media acquisition opportunities outside the United States, Israel and
the Telegraph Territory, and media acquisition opportunities unrelated to
the newspaper business in the United States, Israel and the Telegraph
Territory, except that the Company is permitted to increase its indirect
investment in Southam. The Business Opportunities Agreement does not
restrict newspaper companies in which Hollinger Inc. has a minority
investment from acquiring newspaper or media businesses in the United
States, Israel or the Telegraph Territory, nor does it restrict
subsidiaries of Hollinger Inc. from acquiring up to 20% interests in
publicly held newspaper businesses in the United States. The Business
Opportunities Agreement will be in effect for so long as Hollinger Inc.
holds at least 50% of the voting power of the Company, subject to
termination by either party under specified circumstances. Hollinger Inc.,
with consent of the Company, assigned its rights and obligations under the
Business Opportunities Agreement to a wholly owned subsidiary on September
22, 1997.
USE OF PROCEEDS
The Company will not receive any proceeds from the exercise by holders
of Retractable Shares or Series I and II Preference Shares of their
retraction rights. All shares of Class A Common Stock delivered pursuant to
the terms of the Retractable Shares and the Series I and II Preference
Shares are owned directly or indirectly through subsidiaries by Hollinger
Inc.
SELLING SHAREHOLDER
The following table sets forth certain information with respect to the
beneficial ownership by Hollinger Inc. of the Class A Common Stock, and the
Class B Common Stock as of October 6, 1997.
<TABLE>
<CAPTION>
Class A Common Class B Common
Stock(1) Stock(2) Post Offerings
Percent Percent
Name of Beneficial Number of Prior to After Voting Number of Shares Voting Ownership
Owner Shares Offering Offering Power Power of Common
Prior to Stock
Offering
<S> <C> <C> <C> <C> <C> <C> <C>
Hollinger Inc. 36,817,799 59.8% 3.1% 84.2% 14,990,000 68.5% 19.5%
</TABLE>
- -------
(1) Does not give effect to the issuance of the shares of Class A Common
Stock which may be issued upon conversion of the PRIDES or the exchange of
the Non-Voting HCPH Special Shares.
(2) Class B Common Stock is supermajority voting stock.
PLAN OF DISTRIBUTION
On July 30, 1997, Hollinger Inc. announced that it would undertake an
initiative to enable its shareholders to exchange their common shares (the
"HI Common Shares") for an interest in the Company or to have their
investment in Hollinger Inc. more directly aligned with the Class A Common
Stock of the Company. This initiative involves (i) the payment of a stock
dividend consisting of 30 Retractable Shares for each HI Common Share
outstanding and (ii) a substantial issuer bid (the "Issuer Bid") in which
Hollinger Inc. will offer the Series I and Series II Preference shares in
exchange for up to 80% of the outstanding HI Common Shares and Retractable
Shares held by shareholders other than Mr. Black and his Affiliates.
The stock dividend was paid to all shareholders of record of Hollinger
Inc. common shares on September 12, 1997. Since that time, the HI Common
Shares and Retractable Shares have traded as equity units (the "Equity
Units"), each of which consists of one HI Common Share and 30 Retractable
Shares. Pursuant to the Issuer Bid, Hollinger Inc. will offer to exchange
the Series I and Series II Preference Shares
<PAGE>
for up to 80% of the publicly held outstanding Equity Units. The Issuer Bid
will be made by way of an Issuer Bid Circular. Upon the terms and
conditions described below, Hollinger Inc. will have the option to deliver
shares of Class A Common stock of the Company upon the exercise by holders
of their retraction rights under these newly issued securities.
Retractable Shares
The Retractable Shares are retractable from time to time on or after
October 6, 1997 at the option of the holders for an amount (the "Retraction
Price", as defined below) computed by reference to the underlying assets of
Hollinger Inc. (being principally its interest in the Company) less
provisions for relevant taxes, liabilities and contingencies. Hollinger
Inc. shall pay all or any portion of the Retraction Price of Retractable
Shares to be redeemed on any date which a holder duly tenders the
Retractable Shares ("Retraction Date") by delivering to the holders thereof
(x) a certificate representing that number of Class A Common Stock equal to
the number obtained by dividing the Retraction Price of the Retractable
Shares to be so paid by the Current Class A Market Price (as defined below)
on the Retraction Date or (y) at the option of Hollinger Inc., a check for
the Retraction Price of such Retractable Share. In lieu of delivering a
fraction of a share of Class A Common Stock pursuant to the Share Payment
Right, Hollinger Inc. will make a cash payment in Canadian dollars equal to
the amount obtained by multiplying such fraction by the Current Market
Price of a share of Class A Common Stock.
The "Retraction Price" determined on any date will be 90% of the
(a)"Current Value" of Hollinger Inc., calculated as the excess of the fair
market value of the assets of Hollinger Inc. over its liabilities,
liquidation entitlements for preference shares other than the Retractable
Shares and relevant taxes, all as determined by the Board of Directors or a
committee thereof (the "Board"), divided by (b) the total number of
Retractable Shares and HI Common Shares outstanding on the determination
date. The Board shall determine the Retraction Price as of the end of each
fiscal quarter and as soon as practical thereafter it shall give notice (a
"Retraction Price Notice") thereof in the same manner in which dividend
notices are required to be given by law or any stock exchange on which the
Retractable Shares (or units comprised in part of Retractable Shares) are
listed for trading from time to time.
The Retraction Price shall be in effect for all retractions subsequent
to the date on which the Retraction Price Notice is given. Notwithstanding
the foregoing, the Board shall have the absolute discretion to change the
Retraction Price at any time fluctuating in the trading price of publicly
traded securities owned by Hollinger Inc. cause a change of more than 10%
in the Current Value. To effect such a change, the Retraction Price shall
be determined as of such date selected by the Board and shall become
effective as of the next Business Day following the date on which a press
release is issued by Hollinger Inc. setting out the new Retraction Price or
such later date as specified in such press release. Hollinger Inc. shall
set out in any Retraction Price Notice the number and designation of
publicly-traded securities owned by it (other than Class A Common Stock) if
fluctuations in the trading price thereof during a fiscal quarter of
Hollinger Inc. could reasonable be expected to cause a change of more than
10% in the Current Value during the fiscal quarter.
Series I and Series II Preference Shares
Holder's Retraction Right during Initial Period. At any time during
the applicable Initial Period (as defined below) a holder of Series I and
Series II Preference Shares shall be entitled to require Hollinger Inc. to
redeem all or any of his Series I and Series II Preference Shares for that
number of shares of Class A Common Stock for each Series I and Series II
Preference Share to be redeemed equal to (a) the applicable Initial
Retraction Price (as defined below) divided by (b) the Current Class A
Market Price on the Retraction Date. If the Board of Directors of Hollinger
Inc. elects to fix as the Initial Period Expiry Date (as defined below) for
a series a date earlier than May 6, 1998 (for Series I Preference Shares)
or November 8, 1999 (for Series II Preference Shares), Hollinger Inc. will
issue a press release at least three Business Days prior to such initial
Expiry Date setting out the Determination Date, the Initial Period Expiry
Date and the Exchange Number (as defined below) as of the Initial Period
Expiry Date. The "Initial Retraction Price" for each Series I and Series II
Preference Share is the aggregate of Cdn.$3.50 and Cdn.$8.50, respectively,
and accrued and unpaid dividends per share.
As described below, the right of a holder to receive Class A Common Stock
in payment of the Initial Retraction Price is subject to the right of Hollinger
Inc. to redeem the holder's shares for cash. See "Hollinger Inc.'s Redemption
Right on Receipt of Retraction Notes".
<PAGE>
Holder's Retraction Right after the Initial Period. At any time after
the applicable Initial Period a holder of Series I or Series II Preference
Shares shall be entitled to require Hollinger Inc. to redeem all or any of
his Series I or Series II Preference Shares for that number of shares of
Class A Common Stock for each Series I and Series II Preference Share to be
redeemed equal to (i) the Exchange Number on the Retraction Date and (ii)
the quotient obtained when the Dividend Amount, if any, as of the date of
transfer of such shares of Class A Common Stock is divided by the Current
Class A Market Price on such date. As described below the foregoing
retraction right is subject to Hollinger Inc.'s right to redeem the
holder's shares for cash, see "Hollinger Inc.'s Redemption Right on Receipt
of Retraction Notice."
Hollinger Inc's Redemption Right at end of Initial Period. On the 30th
day after the Initial Period Expiry Date (the "Redemption Date") Hollinger
Inc. may, upon giving notice, redeem all or any part of the then
outstanding Series I or Series II Preference Shares, respectively, on
payment for each share to be redeemed of $4.00 per Series I Preference
Share and $10.00 per Series II Preference Share together with an amount
equal to all dividends accrued and unpaid thereon up to the Redemption Date
(the whole constituting and being herein referred to as the "Redemption
Price"). Hollinger Inc. shall at least three Business Days prior to the
Initial Period Expiry Date issue a press release and no later than 30 days
before the Redemption Date send by prepaid first-class mail or deliver to
each person who at the date of mailing or delivery is a holder of Series I
or Series II Preference Shares to be redeemed a notice in writing of the
intention of Hollinger to redeem such Series I or Series II Preference
Shares.
Hollinger Inc.'s Redemption Right on Receipt of Retraction Notice. On
receipt of a retraction notice in respect of Series I or Series II
Preference Shares, Hollinger Inc. shall be entitled to redeem all or any
part of such Series I or Series II Preference Shares for a cash payment
equal to the Initial Retraction Price or Exchange Price (as defined below),
as applicable, in lieu of redeeming them. Hollinger Inc. shall exercise
this redemption right by sending, delivering or causing to be sent or
delivered to or to the order of the registered holder of Series I or Series
II Preference Shares to be redeemed not later than five days after the
Retraction Date a notice that Hollinger Inc. will exercise this redemption
right in respect of a specified number of shares and not later than 14 days
after the Retraction Date a cheque payable at any branch of its bankers for
the Initial Retraction Price or Exchange Price, as applicable, of such
shares.
Hollinger Inc. shall exercise this redemption right so that, subject
to rules applicable to fractional shares, all holders of Series I or Series
II Preference Shares to be redeemed on any date shall receive the same
portion of the Initial Retraction Price or Exchange Price, as applicable,
in the form of shares of Class A Common Stock and cash.
Certain Conditions to the Delivery of Class A Common Stock. Hollinger Inc.
is required to satisfy the following conditions in respect of shares of Class A
Common Stock delivered on redemption of Series I or Series II Preference
Shares:
(a) the qualification of the shares of Class A Common Stock by the
filing of a prospectus and obtaining a final receipt therefor from
the securities regulatory authorities in each of the provinces of
Canada in which the distribution of such shares of Class A Common
Stock occurs, unless there exists an applicable exemption to
qualification thereunder that allows such shares of Class A Common
Stock (other than those issued to a person who is in a position by
himself or in combination with others to materially affect control
of Hollinger Inc.) to be immediately traded free or resale
restrictions under applicable securities legislation;
(b) the effectiveness of a registration statement under the U.S.
Securities Act of 1933 ("U.S. Securities Act") with respect to the
delivery of such shares of Class A Common Stock pursuant to the
terms of the Series I and Series II Preference Shares, unless an
exemption from the registration requirements of the U.S.
Securities Act is available which would allow such shares of Class
A Common Stock to be immediately traded free of resale
restrictions; and
(c) the listing of such shares of Class A Common Stock on each stock
exchange on which the shares of Class A Common Stock are then
listed.
Adjustment Provisions. The terms of the Series I and Series II
Preference Shares contain provisions which provide for the adjustment of
the applicable Exchange Number and any other affected rights of holders of
Series I and Series II Preference Shares in certain events including the
subdivision (including by means of a stock dividend which the Board of
Directors of Hollinger Inc. determines to treat as a subdivision) or
<PAGE>
consolidation of the shares of Class A Common Stock, the reclassification
of the Class A Common Stock or a consolidation, amalgamation, arrangement
or merger of the Company or a transfer of the undertaking or assets of the
Company. Adjustments will be made successively but no adjustment will be
required unless such adjustment would result in a change of at least 1%
Certain Definitions
"Business Day" means a day other than Saturday, Sunday or any other
day that is treated as a statutory holiday in the jurisdiction in which
Hollinger Inc.'s registered office is located.
"Canadian Dollar Equivalent" means in respect of an amount expressed
in a non-Canadian currency (the "Foreign Currency Amount") at any date the
product obtained by multiplying (a) the Foreign Currency Amount by (b) the
exchange rate for such foreign currency in effect at 12 o'clock noon
(eastern time) on such date as posted by Canadian Imperial Bank of Commerce
or such other exchange rate on such date for such foreign currency as may
be deemed by the Board of Directors of Hollinger Inc. to be appropriate for
such purpose.
"Current Class A Market Price" means in respect of a share of Class A
Common Stock on any date, the Canadian Dollar Equivalent of the per share
closing price (or if no closing price is recorded, the average of the bid
and the ask prices) of shares of Class A Common Stock on the last full
trading day preceding such date as such price is reported on the NYSE
Composite Transactions Tape, or if the shares of Class A Common Stock are
not listed on the NYSE, such other national, regional or provincial
securities exchange or automated quotation system upon which the shares of
Class A Common Stock are listed or quoted, as the case may be, as may be
selected by the Board of Directors of Hollinger Inc. for such purpose;
provided, however, that if in the opinion of the Board of Directors of
Hollinger Inc. the public distribution or trading activity of Class A
Common Stock is inadequate to create a market that reflects the fair market
value of a share of Class A Common Stock, then the Current Class A Market
Price shall be determined by the Board of Directors of Hollinger Inc. based
upon the advice of such qualified independent financial advisors as the
Board of Directors of Hollinger Inc. may deem to be appropriate, and
provided further that any such selection, opinion or determination by the
Board of Directors of Hollinger Inc. shall be conclusive and binding.
"Determination Date" for each of the Series I and Series II Preference
Shares means the fifth Business Day prior to the Initial Period Expiry Date
of the series.
"Dividend Amount" means, as at any date, in respect of a Series I or
Series II Preference Share an amount equal to the full amount of all
dividends and distributions declared and unpaid on each such share and all
dividends and distributions declared on a share of Class A Common Stock in
respect of which a dividend has not been declared on each such share in
accordance with the terms thereof, in each case with a record date prior to
such date.
"Exchange Price" means an amount per Series I or Series II Preference
Share surrendered for retraction equal to (i) the Current Class A Market
Price on the Retraction Date of the applicable Exchange Number of shares of
Class A Common Stock plus (ii) the Dividend Amount, if any, on the
Retraction Date.
"Exchange Number" means, subject to adjustment from time to time, the
result obtained when Cdn.$4.00 in the case of Series I Preference Shares
and Cdn.$10.00 in the case of Series II Preference Shares is divided by (i)
if the Initial Period Expiry Date is May 6, 1998 (in the case of Series I
Preference Shares) or November 8, 1999 (in the case of Series II Preference
Shares), the weighted average trading price of the Class A Common Stock on
the NYSE for 20 consecutive trading days (whether or not shares of Class A
Common Stock traded on such day) ending on (and including) the applicable
Determination Date or (ii) if the Initial Period Expiry Date is prior to
May 6, 1998 (in the case of Series I Preference Shares) or November 8, 1999
(in the case of Series II Preference Shares), the lesser of (A) the
weighted average trading price of the shares of Class A Common Stock on the
NYSE for 20 consecutive trading days (whether or not shares of Class A
Common Stock traded on such day) ending on (and including) the applicable
Determination Date and (B) the weighted average trading price of the shares
of Class A Common Stock on the Determination Date, provided that if the
shares of Class A Common Stock is not listed on the NYSE on the relevant
date(s), the weighted average trading prices referred to above shall be
calculated using trading prices on any stock exchange on which such shares
are listed as the Board of Directors of Hollinger Inc. may select for this
purpose; or if such shares are not listed on any stock exchange, in such
over-the-counter market as the Board of Directors of Hollinger Inc. may
select for such purpose.
<PAGE>
"Initial Period" for each of the Series I and Series II Preference
Shares means the period from the date of issue of such shares to and
including the Initial Period Expiry Date of the series provided that if
Hollinger Inc. exercises its redemption right described under "Hollinger
Inc.'s Redemption Right at end of Initial Period" the Initial Period shall
extend to and include the Redemption Date.
"Initial Period Expiry Date" means May 6, 1998 in the case of Series I
Preference Shares and November 8, 1999 in the case of Series II Preference
Shares unless in either case the Board of Directors of Hollinger Inc.
elects to select an earlier date in which case the Initial Period Expiry
Date shall be such earlier date.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES TO HOLDERS OF CLASS A
COMMON STOCK
Tax Consequences of Retraction to U. S. Holders of Retractable Shares and
Series I and Series II Preference Shares
It is anticipated that a United States Holder (any Holder subject
to United States tax on a net income basis) of Retractable Shares will
recognize gain or loss on the retraction of the Retractable Shares in
exchange for either cash or Class A Common Stock, and on the exchange of
Series I or II Preference Shares for cash. Such gain or loss will be equal
to the difference between the fair market value of the Class A Common Stock
at the time of the exchange, or, if applicable, the amount of cash received
in the exchange, and the United States Holder's tax basis in the
Retractable Shares or the Series I or II Preference Shares. The gain or
loss will be capital gain or loss, except that, with respect to any
declared but unpaid dividends on the Retractable Shares or Series I or II
Preference Shares, ordinary income may be recognized by the holder thereof.
Capital gain or loss will be long-term capital gain or loss if the
Retractable Shares or Series I or II Preference Shares have been held for
more than one year at the time of the exchange. The United States Holder
will take as its tax basis in any Class A Common Stock received the fair
market value of the Class A Common Shares at the time of the exchange. The
holding period of the Class A Common Stock received by the United States
Holder in the exchange will begin on the day after the United States Holder
receives the Class A Common Shares.
It is unclear whether the retraction of the Series I and II
Preference Shares in exchange for Class A Common Stock will constitute a
taxable exchange of such shares for U.S. federal income tax purposes. If
such retraction does constitute such a taxable exchange, the U.S. federal
income tax consequences to a United States Holder will be determined as
discussed in the immediately preceding paragraph.
For U.S. federal income tax purposes, gain realized on the
retraction of Retractable Shares or Series I or II Preference Shares
generally will be treated as U.S. source gain, except that, under the terms
of the Canada-United States Income Tax Convention, such gain may be treated
as sourced in Canada. Any Canadian tax imposed on the exchange will be
available as a credit against U.S. federal income taxes, subject to
applicable limitations. A United States Holder that is ineligible for a
foreign tax credit with respect to any Canadian tax paid may be entitled to
a deduction therefor in computing United States taxable income.
Tax Consequences of Ownership and Disposition of Class A Common Stock to
Non-United States Holders
The following is a general discussion of certain United States federal
income and estate tax consequences of the purchase, ownership and
disposition of Class A Common Stock by a holder that, for United States
federal tax purposes, is not a "United States person" (a "Non-United States
Holder"). For purposes of this discussion, a "United States person" means
any person or entity which is (a) a citizen or resident of the United
States, (b) a corporation created or organized in or under the laws of the
United States or of any political subdivision thereof or (c) an estate or
Trust that is subject to United States federal taxation on its income
regardless of its source. This summary does not address all United States
federal income and estate tax considerations that may be relevant to a
Non-United States Holder in light of its particular circumstances or to
certain Non-United States Holders that may be subject to special treatment
under United States federal tax laws (i.e., insurance companies, tax-exempt
organizations, financial institutions or broker-dealers). Furthermore, this
summary does not discuss any aspects of foreign, state or local taxation.
This summary is based on current provisions of the Internal Revenue Code,
existing, temporary and proposed United States Treasury regulations
promulgated thereunder and administrative and judicial interpretations
thereof, all of which are subject to change, possibly with retroactive
effect. Each prospective Non-United States Holder is advised to consult its
tax advisor with respect to the tax consequences of purchasing, owning and
disposing of Class A Common Stock.
<PAGE>
Dividends
Dividends paid to a Non-United States Holder will generally be subject
to withholding of United States Federal income tax at the rate of 30%
unless the dividend is effectively connected with the conduct of a trade or
business within the United States by the Non-United States Holder, in which
case the dividend will be subject to the United States Federal income tax
on net income that applies to United States persons (and, with respect to
corporate holders and under certain circumstances, a 30% branch profits
tax). Non-United States Holders should consult any applicable income tax
treaties, which may provide for reduced withholding or other rules
different from those described above. A Non-United States Holder may be
required to satisfy certain certification requirements in order to claim
treaty benefits or to otherwise claim a reduction of or exemption from
withholding under the foregoing rules.
Under current United States treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of
such country for purposes if the withholding discussed above (unless the
payer has knowledge to the contrary), and, under the current interpretation
of United States Treasury regulations, for purposes of determining the
applicability of a tax treaty rate. Under recently proposed United States
Treasury regulations (the "Proposed Regulations"), not currently in effect,
however, a Non-United States Holder of Class A Common Stock who wishes to
claim the benefit of an applicable treaty rate would be required to satisfy
applicable certification and other requirements. The Proposed Regulations
are proposed to be effective for payments made after December 31, 1997.
There can be no assurance that the Proposed Regulations will be adopted or
what the provisions will include if and when adopted in temporary or final
form. Certain certification and disclosure requirements must be complied
with in order to be exempt from withholding under the effectively connected
income exemption discussed above.
A Non-United States Holder of Class A Common Stock that is eligible
for a reduced rate of United States tax withholding pursuant to an income
tax treaty may obtain a refund of any excess amounts currently withheld by
filing an appropriate claim for refund with the Internal Revenue Service.
Sale or Disposition of Class A Common Stock
A Non-United States Holder generally will not be subject to United
States federal income tax on any gain recognized on the sale or other
disposition of Class A Common Stock unless (i) (a) the gain is effectively
connected with a trade or business of the Non-United States Holder in the
United States or (b) if a tax treaty applies, the gain is attributable to a
United States permanent establishment of the Non-United States Holder; (ii)
in the case of a Non-United States Holder who is an individual and holds
the Class A Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year of the disposition
and either (a) has a "tax home" for United States federal income tax
purposes in the United States or (b) has an office or other fixed place of
business in the United States to which the gain is attributable; (iii) the
Non-United States Holder is subject to tax pursuant to the provisions of
United States federal income tax laws applicable to certain United States
expatriates; or (iv)(a) the Company is or has been a "U.S. real property
holding corporation" for United States federal income tax purposes at any
time during the five-year period ending on the date of the disposition, or,
if shorter, the period during which the Non-United States Holder held the
Class A Common Stock, and (b) assuming that the Class A Common Stock
continues to be "regularly traded on an established securities market" for
tax purposes, the Non-United States Holder holds, directly or indirectly,
at any time during the five-year period ending on the date of disposition,
more than 5% of the outstanding Class A Common Stock. The Company believes
it is not currently a U.S. Real property holding corporation and does not
anticipate becoming such a corporation.
If an individual Non-United States Holder falls under clause (i)
above, such individual generally will be taxed on the net gain derived from
a sale under regular graduated United States federal income tax rates. If
an individual Non-United States Holder falls under clause (ii) above, such
individual generally will be subject to a flat 30% tax on the gain derived
from a sale, which may be offset by certain United States capital losses
(notwithstanding the fact that such individual is not considered a resident
of the United States). Thus, NonUnited States Holders who have spent (or
expect to spend) 183 days or more in the United States in the taxable year
in which they contemplate a sale of Class A Common Stock are urged to
consult their tax advisors as to the tax consequences of such sale.
If a Non-United States Holder that is a foreign corporation falls
under clause (i) above, it generally will be taxed on its net gain under
regular graduated United States federal income tax rates. Effectively
connected gains realized by a Non-United States corporation may also, under
certain circumstances, be subject to an
<PAGE>
additional "branch profits tax" at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty.
Backup Withholding and Reporting Requirements
The Company must report annually to the Internal Revenue Service and
to each Non-United States Holder the amount of dividends paid to, and the
tax withheld with respect to, such holder, regardless of whether any tax
was actually withheld. This information may also be made available to the
tax authorities in the NonUnited Sates Holder's country of residence.
Under current law, United States backup withholding (which generally
is imposed at a 31% rate) generally will not apply to (i) the payment of
dividends paid on Class A Common Stock to a Non-United States Holder at an
address outside the United States or (ii) the payment of the proceeds of a
sale of Class A Common stock to or through the foreign office of a broker.
However, under the Proposed Regulations, dividend payments may be subject
to information reporting and backup withholding unless applicable
certification requirements are satisfied. In the case of the payment of
proceeds from such a sale of Class A common Stock through a foreign office
of a broker that is a United States person or a "U.S. related person,"
however, information reporting (but not backup withholding) is required
with respect to the payment unless the broker has documentary evidence in
its files that the owner is a Non-United States Holder (and has no actual
knowledge to the contrary) and certain other requirements are met or the
holder otherwise establishes an exemption. For this purpose, a "U.S.
related person" is (i) a "controlled foreign corporation" for United States
federal income tax purposes or (ii) a foreign person 50% or more of whose
gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment (or for such part of the
period that the broker has been in existence) is derived from activities
which are effectively connected with the conduct of a United States trade
or business. The payment of the proceeds of a sale of shares of class A
Common Stock to or through a United States office of a broker is subject to
information reporting and possible backup withholding at a rate of 31%
unless the holder certifies, among other things, its non-United States
status under penalties or perjury or otherwise establishes an exemption.
Backup withholding is not an additional tax. Amounts withheld under
the backup withholding rules are generally allowable as refund or credit
against such Non-United States Holder's United States federal income tax
liability, if any, provided that the required information is furnished to
the Internal Revenue Service.
Federal Estate Taxes
Class A Common Stock owned or treated as owned by an individual who is
not a citizen or resident of the United States (as defined for United Sates
federal estate tax purposes) at the time of death with be included in such
individual's gross estate for United States federal estate tax purposes
unless an applicable estate tax treaty provides otherwise.
THE FOREGOING DISCUSSION IS A SUMMARY OF THE PRINCIPAL UNITED STATES
FEDERAL INCOME AND ESTATE TAX CONSEQUENCES OF THE RETRACTION TO US HOLDERS
AND OF THE OWNERSHIP, SALE OR OTHER DISPOSITION OF CLASS A COMMON STOCK BY
NON-UNITED STATES HOLDERS. ACCORDINGLY, INVESTORS ARE URGED TO CONSULT
THEIR TAX ADVISORS WITH RESPECT TO THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF CLASS A COMMON STOCK,
INCLUDING THE APPLICATION AND EFFECT OF THE LAWS OF ANY STATE, LOCAL
FOREIGN OR OTHER TAXING JURISDICTION.
LEGAL MATTERS
Certain legal matters in connection with the shares of Class A Common
Stock offered hereby will be passed upon for the Company by Kenneth Serota,
Esq., Vice President Law and Finance of the Company.
EXPERTS
The consolidated financial statements of Hollinger International Inc.
and subsidiaries as of December 31, 1996 and 1995, and for each of the
years in the three-year period ended December 31, 1996, incorporated by
reference herein from the Company's 1996 Form 10-K, have been incorporated
by reference in reliance upon
<PAGE>
the report of KPMG Peat Marwick LLP, independent certified public
accountants and upon the authority of said firm as experts in accounting
and auditing.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO ======================================
GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE HOLLINGER INTERNATIONAL INC.
RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR CLASS A COMMON STOCK
THE SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES OTHER THAN THE --------------------
SECURITIES TO WHICH IT RELATES OR
AN OFFER TO SELL OR THE PROSPECTUS
SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY --------------------
CIRCUMSTANCES IN WHICH SUCH OFFER
OR SOLICITATION IS UNLAWFUL. OCTOBER 6, 1997
NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE. ======================================
TABLE OF CONTENTS
Page
Available Information.............. 2
Incorporation of Certain Documents
by Reference...................... 2
The Company........................ 3
Risk Factors....................... 3
Use of Proceeds.................... 6
Selling Shareholder................ 6
Plan of Distribution............... 6
Certain United States Federal Tax
Consequences To Holders of Class A
Common Stock....................... 10
Legal Matters...................... 12
Experts............................ 12
=======================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses to be paid by Hollinger Inc., Ontario Limited,
Canada Limited and/or the Company in connection with the distribution of
the securities being registered, other than underwriting discounts and
commissions, are as follows:
Securities and Exchange Commission Filing $139,209
Fee...................................................
*Legal Fees and Expenses.............................. $100,000
*Printing Expenses.................................... $30,000
*Miscellaneous Expenses............................... $791
-----------
Total $270,000
--------------------
*Estimated.
Item 15. Indemnification of Directors and Officers.
The Company's Restated Certificate of Incorporation provides that no
director of the Company will be personally liable to the Company or any of
its stockholders for monetary damages arising from the director's breach of
the duty of care as a director, with certain limited exceptions.
Pursuant to the provisions of Section 145 of the Delaware General
Corporation Law, every Delaware corporation has the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, against any and all
expenses, judgments, fines and amounts paid in settlement and reasonably
incurred in connection with such action, suit or proceeding. The power to
indemnify applies only if such person acted in good faith and in a manner
he reasonably believed to be in the best interest, or not opposed to the
best interest, of the corporation and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the right
of the corporation as well, but only to the extent of defense and
settlement expenses and to any satisfaction of a judgment or settlement of
the claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication or liability
unless the court, in its discretion, believes that in light of all the
circumstances indemnification should apply.
To the extent any of the persons referred to in the two immediately
preceding paragraphs is successful in the defense of the actions referred
to therein, such person is entitled, pursuant to Section 145, to
indemnification as described above.
The Company's Restated Certificate of Incorporation and Amended and
Restated Bylaws provide for indemnification to officers and directors of
the Company to the fullest extent permitted by the Delaware General
Corporation Law.
The Company maintains a policy of liability insurance which insures
its officers and directors against losses resulting from certain wrongful
acts committed by them in their capacity as officers and directors of the
Company.
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits. The following exhibits are filed as part of this
registration statement:
Exhibit
Number Description
4.01 Specimen Certificate evidencing Class A Common Stocks
(filed as Exhibit 4.1 to Registration Statement on Form S-1
(No. 33-74980))
5.01 Opinion of Kenneth L. Serota, Esq.
23.01 Consent of Kenneth L. Serota, Esq. (included in Exhibit 5.01)
23.02 Consent of KPMG Peat Marwick LLP *
24.01 Powers of Attorney *
99.01 Terms of Retractable Shares *
99.02 Terms of the Series I and Series II Exchangeable Non-Voting
Preference Shares
--------------------
* Previously filed.
<PAGE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on October 3, 1997.
HOLLINGER INTERNATIONAL INC.
By:/s/ KENNETH L. SEROTA
Name: Kenneth L. Serota
Title: Vice President Law & Finance
Pursuant to the requirements of the Securities Act of 1933, this to
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
* Chairman of the Board, Chief October 3, 1997
- ---------------------
Conrad M. Black Executive Officer and Director
(Principal Executive Officer)
* President, Chief Operating Officer October 3, 1997
- --------------------- and Director
F. David Radler
* Vice President and Chief Financial October 3, 1997
- --------------------- Officer (Principal Financial Officer)
J. A. Boultbee
* Group Corporate Controller October 3, 1997
- --------------------- (Principal Accounting Officer)
Frederick A. Creasey
* Director October 3, 1997
- ---------------------
Barbara Amiel Black
* Director October 3, 1997
- ---------------------
Dwayne O. Andreas
Director
- ----------------------
Richard Burt
Director
- ----------------------
Raymond G. Chambers
* Director October 8, 1997
- ---------------------
Daniel W. Colson
* Director October 3, 1997
- ---------------------
Henry A. Kissinger
* Director October 3, 1997
- ---------------------
Marie-Josee Kravis
Directory
- ----------------------
Shmuel Meitar
* Director October 3, 1997
- ----------------------
Richard N. Perle
<PAGE>
Signature Title Date
--------- ----- ----
* Director October 3, 1997
- ---------------------
Robert S. Strauss
Directory
- ---------------------
Alfred Taubman
* Director October 3, 1997
- ---------------------
James R. Thompson
* Director October 3, 1997
- ---------------------
Lord Weidenfeld
Director
- ---------------------
Leslie H. Wexner
* By: /s/ KENNETH L. SEROTA
Kennth L. Serota
***
<PAGE>
19
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.01 Specimen Certificate evidencing Class A Common Stocks (filed as
Exhibit 4.1 to Registration Statement on Form S-1 (No. 33-74980))
5.01 Opinion of Kenneth L. Serota, Esq.
23.01 Consent of Kenneth L. Serota, Esq. (included in Exhibit 5.01)
23.02 Consent of KPMG Peat Marwick LLP *
24.01 Powers of Attorney *
99.01 Terms of Retractable Shares *
99.02 Terms of the Series I and Series II Exchangeable Non-Voting
Preference Shares
- --------------------
* Previously filed.
[Letterhead of]
Hollinger International Inc.
October 1, 1997
Board of Directors
Hollinger International Inc.
401 North Wabash Avenue
Chicago, Illinois 60611
Hollinger International Inc.
Ladies and Gentlemen:
I am Vice President-Law and Finance and
Secretary for Hollinger International Inc., a Delaware
corporation (the "Issuer"), in connection with the Registration
Statement on Form S-3 (the "Registration Statement") being filed
by the Issuer with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the delivery by Hollinger
Inc., an affiliate of the Issuer, of shares of Class A Common
Stock par value $.01 per share, of the Issuer (the "Class A
Common Stock") upon the exercise by holders of the Retractable
Shares and Series I and Series II Exchangeable Non-Voting
Preference Shares (the "Series I and Series II Preference
Shares") of Hollinger Inc. of the retraction rights provided
under those securities.
In connection with the foregoing, I have
examined originals, or copies certified or otherwise identified
to my satisfaction, of such documents, corporate records and
other instruments as I have deemed necessary or appropriate for
the purposes of this opinion, including (a) the Restated
Certificate of Incorporation of the Issuer, as amended, (b) the
By-laws of the Issuer, as amended, (c) certain resolutions of the
Board of Directors of the Issuer and (d) the Registration
Statement.
Based upon the foregoing and subject to the
qualifications hereinafter set forth, I am of opinion that:
1. Based solely on a certificate from the
Secretary of State of Delaware, the Issuer is a
corporation validly existing and in good standing under
the laws of the State of Delaware.
<PAGE>
2. Each share of Class A Common Stock that may
be delivered pursuant to the terms of the Retractable
Shares or the Series I or Series II Preference Shares
has been duly and validly authorized and is validly
issued, fully paid and nonassessable.
I am aware that I am referred to under the
heading "Legal Matters" in the prospectus forming a part of the
Registration Statement, and I hereby consent to such use of my
name therein and the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
/s/KENNETH L. SEROTA
----------------------
Kenneth L. Serota
Vice President - Law and
Finance and Secretary
NUMBER AND DESIGNATION OF
AND RIGHTS, PRIVILEGES, RESTRICTIONS
AND CONDITIONS ATTACHING TO
THE SERIES I PREFERENCE SHARES
The thirteenth series of Preference Shares of
the Corporation shall consist of an unlimited number of
Preference Shares which shall be designated as Exchangeable
Non-Voting Preference Shares Series I (hereinafter referred to as
the "Series I Preference Shares") and which, in addition to the
rights, privileges, restrictions and conditions attached to the
Preference Shares as a class, shall have attached thereto the
following rights, privileges, restrictions and conditions:
1. CONSIDERATION FOR ISSUE
1.1. The consideration for the issue of each Series I Preference
Share shall be $4.00.
2. INTERPRETATION
2.1. Definitions
For the purpose hereof:
a."Act" means the Canada Business Corporations Act, as
amended, re-enacted or replaced from time to time;
b."Board" means the board of directors of the
Corporation or the Executive Committee thereof;
c."Business Day" means a day other than Saturday, Sunday
or any other day that is treated as a statutory holiday
in the jurisdiction in which the Corporation's
registered office is located;
d."Canadian Dollar Equivalent" means in respect of an
amount expressed in a foreign currency (the "Foreign
Currency Amount") at any date the product obtained by
multiplying (A) the Foreign Currency Amount by (B) the
exchange rate for such foreign currency in effect at 12
o'clock noon (eastern time) on such date as posted by
Canadian Imperial Bank of Commerce or, in the event such
exchange rate is not available, such exchange rate on
such date for such foreign currency as may be deemed by
the Board to be appropriate for such purpose;
e."Class A Common Shares" means shares of Class A common
stock of Hollinger International Inc., par value U.S.
$0.01 per share, and any other securities into which
such shares may be changed or for which such shares may
be exchanged (whether or not Hollinger International
shall be the issuer of such other securities) or any
other consideration which may be received by the holders
of such shares
<PAGE>
pursuant to a recapitalization, reconstruction,
reorganization or reclassification of, or amalgamation,
merger, liquidation or similar transaction affecting,
such shares;
f."Current Class A Market Price" means in respect of a
Class A Common Share on any date, the Canadian Dollar
Equivalent of the per share closing price (or if no
closing price is recorded, the average of the bid and
the ask prices) of Class A Common Shares on the last
full trading day preceding such date as such price is
reported on the NYSE Composite Transactions Tape, or if
the Class A Common Shares are not listed on the NYSE,
such other national, regional or provincial securities
exchange or automated quotation system upon which the
Class A Common Shares are listed or quoted, as the case
may be, as may be selected by the Board for such
purpose; provided, however, that if in the opinion of
the Board the public distribution or trading activity of
Class A Common Shares is inadequate to create a market
that reflects the fair market value of a Class A Common
Share then the Current Class A Market Price shall be
determined by the Board based upon the advice of such
qualified independent financial advisors as the Board
may deem to be appropriate, and provided further that
any such selection, opinion or determination by the
Board shall be conclusive and binding; g."Determination
Date" means the fifth Business Day prior to the Initial
Period Expiry Date;
h."Dividend Amount" means, as at any date, an amount
equal to the full amount of all dividends and
distributions declared and unpaid on each Series I
Preference Share and all dividends and distributions
declared on a Class A Common Share in respect of which a
dividend has not been declared on each Series I
Preference Share in accordance with section 3.1.2, in
each case with a record date prior to such date;
i."Exchange Price" means an amount per Series I
Preference Share surrendered for retraction pursuant to
section 5.2 equal to (i) the Current Class A Market
Price on the Retraction Date of the Exchange Number of
Class A Common Shares plus (ii) the Dividend Amount, if
any, on the Retraction Date;
j."Exchange Number" means, subject to adjustment from
time to time in accordance with sections 5.8 and 5.9,
the result obtained when $4.00 is divided by (A) if the
Initial Period Expiry Date is May 6, 1998, the weighted
average trading price of the Class A Common Shares on
the NYSE for the 20 consecutive trading days (whether or
not Class A Common Shares traded on such day) ending on
(and including) the Determination Date and (B) if the
Initial Period Expiry Date is prior to May 6, 1998, the
lesser of (i) the weighted average trading price of the
Class A Common Shares on the NYSE for the 20 consecutive
tradings (whether or not Class A Common Shares traded on
such day) ending on (and including) the Determination
Date and (ii) the weighted average trading price of the
Class A Common Shares on the NYSE on the Determination
Date, provided that if the Class A Common Shares are not
listed on the NYSE on the relevant date(s), the weighted
average trading prices referred to above shall be
calculated using trading prices on any stock exchange on
which such shares are listed as the Board may select for
this purpose, or if such shares are not listed on any
stock exchange, in such over-the-counter market as the
Board may select for such
<PAGE>
purpose;
k."HII Dividend Declaration Date" means the date on
which the Board of Directors of Hollinger International
declares any dividend or distribution on the Class A
Common Shares;
l."Hollinger International Capital Reorganization" has
the meaning set out in section 5.8.3;
m."Hollinger International" means Hollinger
International Inc., a Delaware corporation;
n."Initial Period" means the period from the date of
initial issue of the Series I Preference Shares to and
including the Initial Period Expiry Date;
o."Initial Period Expiry Date" means May 6, 1998 unless
the Board elects pursuant to section 2.2 to select an
earlier date in which case the Initial Period Expiry
Date shall be such earlier date;
p."Initial Retraction Price" has the meaning set out in section 5.1;
q."junior share" means a share of the Corporation
ranking junior to the Series I Preference Shares with
respect to the payment of dividends or the distribution
of assets in the event of the liquidation, dissolution
or winding-up of the Corporation, whether voluntary or
involuntary, or in the event of any other distribution
of assets of the Corporation among its shareholders for
the purpose of winding up its affairs;
r."Liquidation Event" has the meaning set out in section
8.1;
s."Liquidation Price" has the meaning set out in section
8.1;
t."NYSE" means the New York Stock Exchange;
u."ranking as to capital" means ranking with respect to
the distribution of assets in the event of a
liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or in the
event of any other distribution of assets of the
Corporation among its shareholders for the purpose of
winding up its affairs
v."Retraction Date" means any Business Day on which the
documents specified in section 5.3(a) are duly tendered
by a holder of Series I Preference Shares in respect of
the exercise of his or her retraction right pursuant to
Article 5; and
w."Retraction Notice" has the meaning set out in section 5.3(a).
<PAGE>
2.2. Election to Shorten the Initial Period
The Board shall be entitled to select a date prior to
May 6, 1998 as the Initial Period Expiry Date. If the Board
elects to do so then at least three Business Days prior to the
Initial Period Expiry Date, the Corporation shall issue a press
release and on or before the Initial Period Expiry Date the
Corporation shall send by prepaid first class mail or deliver a
notice to all holders of Series I Preference Shares each of which
shall set out the Determination Date, the Initial Period Expiry
Date and the Exchange Number as of the Initial Period Expiry
Date. If the Corporation intends to exercise its redemption right
pursuant to section 4.1 such press release and notice shall also
set out the information contemplated by section 4.1.2.
2.3. Dates
In the event that any date on which any dividend on the
Series I Preference Shares is payable by the Corporation, or on
or by which any other action is required to be taken by the
Corporation or the holders of Series I Preference Shares
hereunder, is not a Business Day, then such dividend shall be
payable, or such other action shall be required to be taken, on
or by the next succeeding date that is a Business Day.
2.4. Currency
All cash amounts paid by the Corporation in respect of
the Series I Preference Shares shall be made in Canadian dollars
and all references herein to monetary amounts shall be construed
accordingly.
3. DIVIDENDS
3.1. Payment of Dividends
The holders of the Series I Preference Shares
shall be entitled to receive, and the Corporation shall pay
thereon, as and when declared by the Board, subject to the
insolvency provisions of applicable law, cumulative preferential
cash dividends payable in lawful money of Canada as follows:
3.1.1. during the Initial Period, a fixed dividend of
7.00% per annum of the issue price of $4.00 per share
payable quarterly on each third month anniversary of the
date of original issue of Series I Preference Shares;
and
3.1.2. after the Initial Period, a dividend per share as follows:
a. in the case of a cash dividend or distribution
on Class A Common Shares having a record date
after the Determination Date, in an amount in
cash per Series I Preference Share equal to the
product of (i) the Canadian Dollar Equivalent
on the payment date thereof of such cash
dividend or distribution on each Class A Common
Share less any United States withholding tax
thereon payable by the
<PAGE>
Corporation or any subsidiary thereof and (ii)
the Exchange Number as of the HII Dividend
Declaration Date;
b. in the case of a stock dividend or distribution
declared on a Class A Common Share to be paid
in Class A Common Shares having a record date
after the Determination Date in respect of
which an adjustment is not made pursuant to
section 5.8, in that number of Series I
Preference Shares for each Series I Preference
Share equal to the product of (i) the number of
Class A Common Shares to be paid on each Class
A Common Share less any United States
withholding tax thereon payable by the
Corporation or any subsidiary thereof and (ii)
the Exchange Number as of the HII Dividend
Declaration Date; or
c. in the case of a dividend or distribution on
the Class A Common Shares to be paid in
property other than cash or Class A Common
Shares having a record date after the
Determination Date in respect of which an
adjustment is not made pursuant to section 5.8,
in such type and amount of property for each
Series I Preference Share as is the same as or
economically equivalent to (to be determined by
the Board) the type and amount of property
declared as a dividend or distribution on the
Exchange Number (as of the HII Dividend
Declaration Date) of Class A Common Shares less
any United States withholding tax thereon
payable by the Corporation or any subsidiary
thereof.
For any period during the Initial Period which is less
than a full quarter with respect to any Series I
Preference Share which is redeemed or in respect of
which assets of the Corporation are distributed to the
holders thereof pursuant to Article 8 during such
quarter, dividends shall be deemed to accrue on a daily
basis and shall be equal to the amount calculated by
multiplying $0.07 by a fraction of which the numerator
is the number of days in such period and the denominator
is the number of days in such quarter.
3.2. Method of Payment
a. Cheques payable in lawful money of Canada at
any branch in Canada of the Corporation's
bankers shall be issued in respect of any cash
dividends or distributions on the Series I
Preference Shares (less any tax required to be
withheld by the Corporation). The mailing, by
prepaid first class mail, of such a cheque to a
holder of Series I Preference Shares, shall be
deemed to be payment of the dividends
represented thereby unless the cheque is not
paid upon presentation. Dividends which are
represented by a cheque which has not been
presented to the Corporation's bankers for
payment or that otherwise remain unclaimed for
a period of six years from the date on which
they were declared to be payable shall be
forfeited to the Corporation.
b. Certificates registered in the name of the
registered holder of Series I Preference Shares
shall be issued or transferred in respect of
any stock dividends or other distribution on
Series I Preference Shares contemplated by
section 3.2(b) hereof and the sending of such a
certificate to each holder of a Series I
Preference Share
<PAGE>
shall satisfy the stock dividend or other
distribution of Series I Preference Shares
represented thereby.
c. Such other type and amount of property in
respect of any dividends or distributions
contemplated by section 3.2(c) hereof shall be
issued, distributed or transferred by the
Corporation in such manner as it shall
determine and the issuance, distribution or
transfer thereof by the Corporation to each
holder of a Series I Preference Share shall
satisfy the dividend or distribution
represented thereby.
d. Notwithstanding anything to the contrary herein
the Corporation shall pay to any shareholder
whose latest address as shown on the books of
the Corporation is not in Canada all dividends
in United States dollars unless any such
shareholder requests payment in Canadian
dollars. Any such payment in United States
dollars shall be in an amount equivalent to the
amount otherwise payable in Canadian dollars
converted to United States dollars at the Bank
of Canada noon rate of exchange on the
applicable dividend record date.
3.3. Record and Payment Dates
The record date for the determination of the holders of
Series I Preference Shares entitled to receive payment of, and
the payment date for, any dividend or distribution declared on
the Series I Preference Shares under section 3.1.2 hereof shall
be the same as the record date and payment date, respectively,
for the corresponding dividend or distribution on the Class A
Common Shares.
3.4. Partial Payment
If on any payment date for any dividends or
distributions declared on the Series I Preference Shares under
section 3.1 hereof the dividends or distributions are not paid in
full on all of the Series I Preference Shares then outstanding,
any such dividends or distributions that remain unpaid shall be
paid on a subsequent date or dates determined by the Board on
which the Corporation shall have sufficient money or other assets
properly applicable to the payment of such dividends or
distributions.
4. REDEMPTION
4.1. Optional Redemption at End of Initial Period
4.1.1. On the 30th day following the Initial Period
Expiry Date (the "Redemption Date"), subject to the
provisions of the Act, this Article 4 and to the rights,
privileges, restrictions and conditions attaching to any
shares of the Corporation ranking prior to the Series I
Preference Shares, the Corporation may, upon giving
notice as hereinafter provided, redeem all or any part
of the then outstanding Series I Preference Shares on
payment for each share to be redeemed of $4.00 together
with an amount equal to all dividends accrued and unpaid
thereon up to the Redemption Date (the whole
constituting and being herein referred to as the
"Redemption Price"). In the case of a redemption of less
than all of the Series I Preference Shares pursuant to
this section 4.1 the Corporation shall redeem as nearly
as
<PAGE>
practicable the same portion of Series I Preference
Shares held by each holder.
4.1.2. In case of redemption of Series I Preference
Shares pursuant to section 4.1, at least three Business
Days prior to the Initial Period Expiry Date the
Corporation shall issue a press release and on or before
the Initial Period Expiry Date the Corporation shall
send by prepaid first class mail or deliver a notice to
each person who at the date of mailing or delivery is a
holder of Series I Preference Shares each of which shall
state that the Corporation intends to redeem Series I
Preference Shares pursuant to this section 4.1 and set
out the Redemption Price and Redemption Date. Such
notice shall be mailed or delivered to each holder of
Series I Preference Shares to be redeemed at the last
address of such holder as it appears on the securities
register of the Corporation, or in the event of the
address of any such holder not so appearing, then to the
last address of such holder known to the Corporation.
Accidental failure or omission to give such notice to
one or more holders shall not affect the validity of
such redemption, but if such failure or omission is
discovered notice as aforesaid shall be given forthwith
to such holder or holders and shall have the same force
and effect as if given in due time. The press release
shall also set out the portion of Series I Preference
Shares to be redeemed and the notice shall also set out
the number of Series I Preference Shares held by the
person to whom it is addressed which are to be redeemed
and the place or places in Canada at which holders of
Series I Preference Shares may present and surrender the
certificate or certificates representing such shares for
redemption.
On and after the Initial Period Expiry Date,
the Corporation shall pay or cause to be paid to or to
the order of the holders of the Series I Preference
Shares to be redeemed the Redemption Price of such
shares on presentation and surrender, at the registered
office of the Corporation or any other place or places
in Canada specified in the notice of redemption, of the
certificate or certificates representing the Series I
Preference Shares called for redemption. Payment in
respect of Series I Preference Shares being redeemed
shall be made by cheque payable to the respective
holders thereof in lawful money of Canada at any branch
in Canada of the Corporation's bankers. If a part only
of the Series I Preference Shares represented by any
certificate shall be redeemed, a new certificate
representing the balance of such shares shall be issued
to the holder thereof at the expense of the Corporation
upon presentation and surrender of the first mentioned
certificate.
The Corporation shall have the right, at any
time after the mailing or delivery of notice of its
intention to redeem Series I Preference Shares, to
deposit the Redemption Price of the Series I Preference
Shares so called for redemption, or of such of the
Series I Preference Shares which are represented by
certificates which have not, at the date of such
deposit, been surrendered by the holders thereof in
connection with such redemption, in a separate account
in any chartered bank or trust company in Canada named
in the redemption notice or in a subsequent notice in
writing to the holders of the Series I Preference Shares
in respect of which the deposit is made, to be paid
without interest to or to the order of the respective
holders of the Series I Preference Shares called for
redemption upon presentation and surrender to such bank
or trust company of the certificates representing such
shares. Upon such deposit being made or upon the
Redemption Date, whichever is the later, the Series I
Preference Shares in respect of which such deposit shall
have been made shall be deemed to be redeemed and the
rights of the holders thereof shall be limited to
receiving, without interest, the Redemption Price of
their respective Series I Preference Shares being
<PAGE>
redeemed upon presentation and surrender of the
certificate or certificates representing such shares.
Any interest allowed on any such deposit shall belong to
the Corporation.
4.2. Optional Redemption Right on Receipt of Retraction Notice
4.2.1. On receipt of a retraction notice in respect of
Series I or Series II Preference Shares, Hollinger shall
be entitled to redeem all or any part of such Series I
or Series II Preference Shares for a cash payment equal
to the Initial Retraction Price or Exchange Price, as
applicable, in lieu of redeeming them. Hollinger shall
exercise this redemption right by sending or causing to
be sent by prepaid first class mail or delivering to the
registered holder of Series I or Series II Preference
Shares to be redeemed not later than five days after the
Retraction Date a notice that the Corporation will
redeem that number of Series I Preference Shares
specified in such notice pursuant to this section 4.2.
4.2.2. Hollinger shall exercise this redemption right so
that, subject to rules applicable to fractional shares,
all holders of Series I Preference Shares to be redeemed
on any date shall receive the same portion of the
Initial Retraction Price or Exchange Price, as
applicable, payable to them in the form of Class A
Common Shares and cash.
4.2.3. The Corporation shall redeem Series I Preference
Shares pursuant to this section 4.2 by sending or
causing to be sent to or to the order of the registered
holder thereof not later than 14 days after the
Retraction Date a cheque payable at any branch of the
Corporation's bankers for the Initial Retraction Price
or Exchange Price, as applicable, of such shares.
4.3. Cessation of Rights
Series I Preference Shares redeemed pursuant to this
Article 4 shall cease to be entitled to dividends or any other
participation in any distribution of the assets of the
Corporation and the holders thereof shall not be entitled to
exercise any of their other rights as shareholders in respect
thereof unless the payment to be made on redemption shall not be
made as required in which case the rights of the holders shall
remain unaffected. Redemption moneys which are represented by a
cheque which has not been presented to the Corporation's bankers
for payment or that otherwise remain unclaimed (including moneys
held on deposit in a separate account as provided for above) for
a period of six years from the date specified for redemption
shall be forfeited to the Corporation.
5. RETRACTION RIGHTS
5.1. Right of Retraction During Initial Period
At any time during the Initial Period a holder of
Series I Preference Shares shall be entitled, subject to the
provisions of the Act and in the manner hereinafter provided, to
require the Corporation to redeem all or any of the Series I
Preference Shares registered in the name of such holder in
consideration for the transfer to such holder of that number of
Class A Common Shares for each Series I Preference Share to be
redeemed equal to (i) $3.50 plus accrued and unpaid dividends per
Series I Preference Share to and including the Retraction Date
(the "Initial Retraction Price") divided by (ii) the Current
Class A Market Price on the Retraction Date.
<PAGE>
5.2. Right of Retraction after Initial Period
At any time after the Initial Period, a holder of
Series I Preference Shares shall be entitled, subject to the
provisions of the Act and in the manner hereinafter provided, to
require the Corporation to redeem all or any of the Series I
Preference Shares registered in the name of the holder in
consideration for the transfer to such holder of that number of
Class A Common Shares for each Series I Preference Share to be
redeemed equal to (i) the Exchange Number on the Retraction Date
plus (ii) the quotient obtained when the Dividend Amount, if any,
as of the date of transfer of such Class A Common Shares to such
holder on the Hollinger International register is divided by the
Current Class A Market Price on such date.
5.3. Retraction Procedure
a. Series I Preference Shares may be retracted
only by the registered holder thereof
presenting and surrendering to the Corporation,
at any place where the Series I Preference
Shares may be transferred or at such other
place or places as shall be specified in
writing by the Corporation to the holders of
the Series I Preference Shares from time to
time, the share certificate or certificates
representing the Series I Preference Shares to
be redeemed, duly completed and endorsed in the
manner prescribed thereon, together with a
request in writing in such form as may be
acceptable to the Corporation (in this section
5.3, the "Retraction Notice") from such holder
specifying the number of Series I Preference
Shares to be redeemed by the Corporation.
b. Subject to sections 4.2, 5.5 and 5.6 hereof,
the Corporation shall redeem the appropriate
number of Retractable Shares by sending or
causing to be sent to or to the order of the
registered holder thereof not later than 14
days after the Retraction Date a certificate
representing that number of Class A Common
Shares to which the holder is entitled.
c. If less than all of the Series I Preference
Shares represented by any certificate or
certificates so endorsed are to be redeemed,
the Corporation shall issue and deliver to such
holder, at the expense of the Corporation, a
new share certificate representing the Series I
Preference Shares which are not being
surrendered for retraction.
5.4. Election Irrevocable
Subject to paragraph 5.6 hereof, the election by a
registered holder of Series I Preference Shares to surrender any
Series I Preference Shares for retraction shall be irrevocable
upon receipt by the Corporation at its registered office of the
Retraction Notice and the certificate or certificates
representing the Series I Preference Shares to be redeemed;
provided that the Corporation may, in its unfettered discretion,
permit withdrawal of any such election at any time prior to
payment of the Initial Retraction Price for the Series I
Preference Shares to be redeemed.
<PAGE>
5.5. Relating to the Delivery of Class A Common Shares
5.5.1. Qualification and Listing
The Corporation's shall satisfy the following
conditions in respect of Class A Common Shares delivered
on a redemption of Series I Preference Shares:
a. the qualification of the Class A Common Shares
by the filing of a prospectus and obtaining a
final receipt therefor from the securities
regulatory authorities in each of the provinces
of Canada in which the distribution of such
Class A Common Shares occurs, unless there
exists an applicable exemption to qualification
thereunder that allows such Class A Common
Shares (other than those issued to a person who
is in a position by himself or in combination
with others to materially affect control of the
Corporation) to be immediately traded free of
resale restrictions under applicable securities
legislation; and
b. the effectiveness of a registration statement
under the U.S. Securities Act of 1933 ("U.S.
Securities Act") with respect to the delivery
of such Class A Common Shares, unless an
exemption from the registration requirements of
the U.S. Securities Act is available which
would allow such Class A Common Shares to be
immediately traded free of resale restrictions;
and
c. the listing of such Class A Common Shares on
each stock exchange on which the Class A Common
Shares are then listed.
5.5.2. Fractions of Class A Common Shares
The Corporation shall not deliver a
fraction of a Class A Common Share on redemption of
Series I Preference Shares. In lieu thereof, the
Corporation shall make a cash payment equal to the
amount which would have been satisfied by the fraction
of the Class A Common Share.
5.6. Retraction Limitation
a. If the redemption by the Corporation of all
Series I Preference Shares surrendered for
retraction on a Retraction Date would be
contrary to applicable law, the Corporation
shall redeem only the maximum number of Series
I Preference Shares which it is then permitted
to redeem selected pro rata (disregarding
fractions of shares) from the Series I
Preference Shares surrendered for retraction
according to the number of Series I Preference
Shares surrendered for retraction by each
holder thereof. Thereupon, each such holder
shall be entitled, by notice to the Corporation
to withdraw all or part only of the Series I
Preference Shares surrendered by such holder
for retraction on such Retraction Date which
have not been redeemed by the Corporation and
the Corporation shall, at its expense, issue
and deliver to each holder who exercises such
right of withdrawal a new share certificate
representing the Series I Preference Shares so
withdrawn. Thereafter, the Corporation shall
redeem on a date or dates determined by the
Board on which the Corporation shall have
sufficient assets to permit such redemption,
the
<PAGE>
maximum number of Series I Preference Shares as
have been surrendered for retraction and not
withdrawn or redeemed which the Corporation
determines it is then permitted to redeem,
selected pro rata (disregarding fractions of
shares) from such Series I Preference Shares
according to the number of such Series I
Preference Shares then held by each holder
thereof and so on until all such Series I
Preference Shares have been redeemed.
b. If the Board has acted in good faith in making
any of the determinations referred to in
paragraph 5.6(a) hereof, the Board and the
Corporation shall have no liability if such
determination proves to be inaccurate.
c. If the Corporation does not redeem all Series I
Preference Shares surrendered for retraction on
a Retraction Date the Corporation shall
forthwith after such date notify each holder
whose Series I Preference Shares have not been
redeemed on such date of such holder's right to
withdraw the Series I Preference Shares
surrendered and not redeemed by the
Corporation.
5.7. Cessation of Rights
Series I Preference Shares redeemed pursuant to
this Article 5 shall cease to be entitled to dividends or any
other participation in any distribution of the assets of the
Corporation and the holders thereof shall not be entitled to
exercise any of their other rights as shareholders in respect
thereof as of the date on which Class A Common Shares deliverable
to them on redemption are transferred to them on the Hollinger
International register.
5.8. Changes Affecting the Class A Common Shares
5.8.1. If and whenever at any time after the
Determination Date, Hollinger International:
a. subdivides its outstanding Class A Common
Shares into a greater number of Class A Common
Shares (including by way of a stock dividend
which the Board decides to treat as a
subdivision); or
b. consolidates its outstanding Class A Common
Shares into a smaller number of Class A Common
Shares, then the Exchange Number will be
adjusted effective immediately after the
effective date or record date for such event by
multiplying the Exchange Number in effect
immediately prior to such effective date or
record date by a fraction, the numerator of
which will be the number of Class A Common
Shares outstanding immediately after giving
effect to such event and the denominator of
which will be the number of Class A Common
Shares outstanding on such effective date or
record date before giving effect to such event.
<PAGE>
5.8.2. If and whenever at any time after the date
hereof, there is a reclassification of the Class A
Common Shares at any time outstanding or change of the
Class A Common Shares into other shares or into other
securities or other capital reorganization (other than
an event described in section 5.8.1), or a
consolidation, amalgamation, arrangement or merger of
Hollinger International with or into any other
corporation or other entity (other than a consolidation,
amalgamation, arrangement or merger which does not
result in any reclassification of the outstanding Class
A Common Shares or a change of the Class A Common Shares
into other shares), or a transfer of the undertaking or
assets of Hollinger International as an entirety or
substantially as an entirety to another corporation or
other entity in which the holders of Class A Common
Shares are entitled to receive shares, other securities
or other property (any of such events being called an
"Hollinger International Capital Reorganization"), a
holder of Series I Preference Shares will be entitled to
receive on exercise of his or her retraction right
pursuant to section 5.2, and shall accept in lieu of
Class A Common Shares, the aggregate number of shares,
other securities or other property which such holder
would have been entitled to receive as a result of such
Hollinger International Capital Reorganization if, on
the effective date thereof, the holder had been the
registered holder of the number of Class A Common Shares
which such holder would have received if the Retraction
Date were immediately prior to such effective date,
subject in all such cases, to the Corporation's right to
redeem Series I Preference Shares pursuant to section
4.2. If determined appropriate by the Board, appropriate
adjustments will be made as a result of any such
Hollinger International Capital Reorganization in the
application of the provisions set forth in this Article
with respect to the rights and interests thereafter of
holders of Series I Preference Shares to the end that
the provisions set forth in this Article will thereafter
correspondingly be made applicable as nearly as may
reasonably be in relation to any shares, other
securities or other property thereafter deliverable upon
the exercise of any Series I Preference Shares.
5.8.3. If and whenever at any time after the date hereof
Hollinger International takes any action affecting the
Class A Common Shares other than an action described in
sections 3.1.2, 5.8.1 or 5.8.2 which in the opinion of
the Board would materially affect the rights of the
holders of Series I Preference Shares, the Exchange
Number or other terms of Article 5 will be adjusted in
such manner, if any, and at such time, by action by the
Board, in their sole discretion, as they may determine
to be equitable in the circumstances, but subject in all
cases to any necessary regulatory approvals, including
any approval required by any stock exchange on which the
Series I Preference Shares may be listed. Failure of the
taking of action by the Board so as to provide for an
adjustment on or prior to the effective date of any such
action will be conclusive evidence that the Board have
determined that it is equitable to make no adjustment in
the circumstances.
5.9. Rules Applicable to Adjustments
For the purposes of section 5.8:
5.9.1. The adjustments provided for in section 5.8 are
cumulative and will be made successively whenever an
event referred to therein occurs, subject to the
following
<PAGE>
subsections of this section.
5.9.2. No adjustment of the Exchange Number will be
required unless such adjustment would result in a change
of at least 1%; provided, however, that any adjustments
which, except for the provisions of this subsection
would otherwise have been required to be made, will be
carried forward and taken into account in any subsequent
adjustment.
5.9.3. If at any time a dispute arises with respect to
adjustments such dispute will be conclusively determined
by the Corporation's auditors or if they are unable or
unwilling to act, by such other firm of independent
chartered accountants as may be selected by action by
the Board and any such determination will be binding
upon the Corporation and the holders of Series I
Preference Shares; such auditors or accountants will be
given access to all necessary records of the
Corporation.
5.9.4. If Hollinger International sets a record date to
determine the holders of Class A Common Shares to take
any action and thereafter and before the taking of such
action, legally abandons its plan to take such other
action, then no adjustment will be required by reason of
the setting of such record date.
5.9.5. No adjustment need be made for a transaction
referred to in section 5.8 if holders of Series I
Preference Shares participate in the transaction on a
basis and with notice that the Board determines to be
fair and appropriate in the circumstances.
6. VOTING RIGHTS
6.1. Except as herein referred to or as required by law, the
holders of the Series I Preference Shares as a series shall not
be entitled as such to receive notice of, to attend or to vote at
any meeting of the shareholders of the Corporation.
7. RESTRICTIONS ON DIVIDENDS AND RETIREMENT OF SHARES
7.1. So long as any of the Series I Preference Shares are
outstanding, the Corporation shall not, without the approval of
the holders of the Series I Preference Shares given as
hereinafter specified:
7.1.1. declare, pay or set apart for payment any
dividends on any junior shares (other than dividends
payable in shares of the Corporation ranking as to
capital and dividends junior to the Series I Preference
Shares);
7.1.2. call for redemption, redeem, purchase or
otherwise pay off or retire for value, or make any
capital distributions in respect of, any junior shares;
7.1.3. except in connection with the redemption of
Series I Preference Shares pursuant to Articles 4 or 5,
call for redemption, redeem, purchase or otherwise pay
off or retire for value, or make any capital
distribution in respect of, less than all of the Series
I Preference Shares;
<PAGE>
7.1.4. call for redemption, redeem, purchase or
otherwise pay off or retire for value, or make any
capital distribution in respect of, any shares ranking
as to capital or dividends on a parity with the Series I
Preference Shares except in connection with the
retirement thereof pursuant to a retraction privilege
attaching thereto; or
7.1.5. issue any shares ranking as to capital or
dividends prior to or on a parity with the Series I
Preference Shares;
unless, in each such case, (i) all dividends on the Series I
Preference Shares then outstanding and on all other shares of the
Corporation ranking as to dividends prior to or on a parity with
the Series I Preference Shares which have accrued up to and
including the dividends payable on the immediately preceding
respective date or dates for the payment of dividends thereon
shall have been declared and paid or set apart for payment, (ii)
the Corporation shall have redeemed all of the Series I
Preference Shares tendered for redemption pursuant to Article 5,
and (iii) the Corporation is not otherwise in default under the
rights, privileges, restrictions and conditions attached to the
Series I Preference Shares or any other shares of the Corporation
ranking as to dividends or as to capital prior to or on a parity
with the Series I Preference Shares.
8. LIQUIDATION, DISSOLUTION OR WINDING-UP
8.1. In the event of the liquidation, dissolution or winding-up
of the Corporation, whether voluntary or involuntary, or in the
event of any other distribution of assets of the Corporation
among its shareholders for the purpose of winding up its affairs
(any such event being herein referred to as a "Liquidation
Event"), the holders of the Series I Preference Shares shall be
entitled to receive from the assets of the Corporation the
following amount:
a. if the Liquidation Event occurs during the
Initial Period, a sum equal to $4.00 for each
Series I Preference Share held by them
respectively, plus an amount equal to all
dividends accrued and unpaid thereon up to the
date of payment; and
b. if the Liquidation Event occurs after the
Initial Period, an amount per share equal to
(i) the Current Class A Market Price on the
date of the Liquidation Event of the Exchange
Number of Class A Common Shares (the
"Liquidation Price") which shall be satisfied
in full by the Corporation causing to be
delivered to such holder the Exchange Number of
Class A Common Shares for each Series I
Preference Share or, at the option of the
Corporation, by payment in lawful money of
Canada of the Liquidation Price, plus (ii) the
Dividend Amount, if any, on the date of
transfer of such Class A Common Shares to such
holder.
The whole of such amounts shall be paid before any amount shall
be paid by the Corporation or any assets of the Corporation shall
be distributed to holders of shares of any class of the
Corporation ranking as to capital junior to the Series I
Preference Shares. After payment to the holders of the Series I
Preference Shares of the amounts so payable to them, they shall
not be entitled to share in any further distribution of the
assets of the Corporation.
<PAGE>
9. AMENDMENT
9.1. The rights, privileges, restrictions and conditions attached
to the Series I Preference Shares may be added to, changed or
removed by Articles of Amendment, but only with the approval of
the holders of the Series I Preference Shares given as
hereinafter specified in addition to any vote or authorization
required by law.
10. APPROVAL OF HOLDERS OF THE SERIES I PREFERENCE SHARES
10.1. The approval of the holders of the Series I Preference
Shares to add to, change or remove any right, privilege,
restriction or condition attaching to the Series I Preference
Shares as a series or in respect of any other matter requiring
the consent of the holders of the Series I Preference Shares may
be given in such manner as may then be required by law, subject
to a minimum requirement that such approval be given by
resolution signed by all the holders of the Series I Preference
Shares or passed by the affirmative vote of at least 2/3 of the
votes cast at a meeting of the holders of the Series I Preference
Shares duly called for that purpose.
The formalities to be observed with respect to the
giving of notice of any such meeting or any adjourned meeting,
the quorum required therefor and the conduct thereof shall be
those from time to time prescribed by the by-laws of the
Corporation with respect to meetings of shareholders or if not so
prescribed, as required by the Act in force at the time of the
meeting or as otherwise required by law. On every poll taken at
every meeting of holders of Series I Preference Shares as a
series, each holder of Series I Preference Shares entitled to
vote thereat shall have one vote in respect of each Series I
Preference Share held.
<PAGE>
NUMBER AND DESIGNATION OF
AND RIGHTS, PRIVILEGES, RESTRICTIONS
AND CONDITIONS ATTACHING TO
THE SERIES II PREFERENCE SHARES
The thirteenth series of Preference Shares of the
Corporation shall consist of an unlimited number of Preference
Shares which shall be designated as Exchangeable Non-Voting
Preference Shares Series II (hereinafter referred to as the
"Series II Preference Shares") and which, in addition to the
rights, privileges, restrictions and conditions attached to the
Preference Shares as a class, shall have attached thereto the
following rights, privileges, restrictions and conditions:
1. CONSIDERATION FOR ISSUE
1.1. The consideration for the issue of each Series II Preference
Share shall be $10.00.
2. INTERPRETATION
2.1. Definitions
For the purpose hereof:
a. "Act" means the Canada Business Corporations Act,
as amended, re-enacted or replaced from time to
time;
b. "Board" means the board of directors of the
Corporation or the Executive Committee thereof;
c. "Business Day" means a day other than Saturday,
Sunday or any other day that is treated as a
statutory holiday in the jurisdiction in which the
Corporation's registered office is located;
d. "Canadian Dollar Equivalent" means in respect of
an amount expressed in a foreign currency (the
"Foreign Currency Amount") at any date the product
obtained by multiplying (A) the Foreign Currency
Amount by (B) the exchange rate for such foreign
currency in effect at 12 o'clock noon (eastern
time) on such date as posted by Canadian Imperial
Bank of Commerce or, in the event such exchange
rate is not available, such exchange rate on such
date for such foreign currency as may be deemed by
the Board to be appropriate for such purpose;
e. "Class A Common Shares" means shares of Class A
common stock of Hollinger International Inc., par
value U.S. $0.01 per share, and any other
securities into which such shares may be changed
or for which such shares may be exchanged (whether
or not Hollinger International shall be the issuer
of such other securities) or any other
consideration which may be received by the holders
of such shares
<PAGE>
pursuant to a recapitalization, reconstruction,
reorganization or reclassification of, or
amalgamation, merger, liquidation or similar
transaction affecting, such shares;
f. "Current Class A Market Price" means in respect of
a Class A Common Share on any date, the Canadian
Dollar Equivalent of the per share closing price
(or if no closing price is recorded, the average
of the bid and the ask prices) of Class A Common
Shares on the last full trading day preceding such
date as such price is reported on the NYSE
Composite Transactions Tape, or if the Class A
Common Shares are not listed on the NYSE, such
other national, regional or provincial securities
exchange or automated quotation system upon which
the Class A Common Shares are listed or quoted, as
the case may be, as may be selected by the Board
for such purpose; provided, however, that if in
the opinion of the Board the public distribution
or trading activity of Class A Common Shares is
inadequate to create a market that reflects the
fair market value of a Class A Common Share then
the Current Class A Market Price shall be
determined by the Board based upon the advice of
such qualified independent financial advisors as
the Board may deem to be appropriate, and provided
further that any such selection, opinion or
determination by the Board shall be conclusive and
binding;
g. "Determination Date" means the fifth Business Day
prior to the Initial Period Expiry Date;
h. "Dividend Amount" means, as at any date, an amount
equal to the full amount of all dividends and
distributions declared and unpaid on each Series
II Preference Share and all dividends and
distributions declared on a Class A Common Share
in respect of which a dividend has not been
declared on each Series II Preference Share in
accordance with section 3.1.2, in each case with a
record date prior to such date;
i. "Exchange Price" means an amount per Series II
Preference Share surrendered for retraction
pursuant to section 5.2 equal to (i) the Current
Class A Market Price on the Retraction Date of the
Exchange Number of Class A Common Shares plus (ii)
the Dividend Amount, if any, on the Retraction
Date;
j. "Exchange Number" means, subject to adjustment
from time to time in accordance with sections 5.8
and 5.9, the result obtained when $10.00 is
divided by (A) if the Initial Period Expiry Date
is November 8, 1999, the weighted average trading
price of the Class A Common Shares on the NYSE for
the 20 consecutive trading days (whether or not
Class A Common Shares traded on such day) ending
on (and including) the Determination Date and (B)
if the Initial Period Expiry Date is prior to
November 8, 1999, the lesser of (i) the weighted
average trading price of the Class A Common Shares
on the NYSE for the 20 consecutive tradings
(whether or not Class A Common Shares traded on
such day) ending on (and including) the
Determination Date and (ii) the weighted average
trading price of the Class A Common Shares on the
NYSE on the Determination Date, provided that if
the Class A Common Shares are not listed on the
NYSE on the relevant date(s), the weighted average
trading prices referred to above shall be
calculated using trading prices on any stock
exchange on which such shares are listed as the
Board may select for this purpose, or if such
shares are not listed on any stock exchange, in
such over-the-counter market as the
<PAGE>
Board may select for such purpose;
k. "HII Dividend Declaration Date" means the date on
which the Board of Directors of Hollinger
International declares any dividend or
distribution on the Class A Common Shares;
l. "Hollinger International Capital Reorganization"
has the meaning set out in section 5.8.3;
m. "Hollinger International" means Hollinger
International Inc., a Delaware corporation;
n. "Initial Period" means the period from the date of
initial issue of the Series II Preference Shares
to and including the Initial Period Expiry Date;
o. "Initial Period Expiry Date" means November 8,
1999 unless the Board elects pursuant to section
2.2 to select an earlier date in which case the
Initial Period Expiry Date shall be such earlier
date;
p. "Initial Retraction Price" has the meaning set out
in section 5.1;
q. "junior share" means a share of the Corporation
ranking junior to the Series II Preference Shares
with respect to the payment of dividends or the
distribution of assets in the event of the
liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or
in the event of any other distribution of assets
of the Corporation among its shareholders for the
purpose of winding up its affairs;
r. "Liquidation Event" has the meaning set out in
section 8.1;
s. "Liquidation Price" has the meaning set out in
section 8.1;
t. "NYSE" means the New York Stock Exchange;
u. "ranking as to capital" means ranking with respect
to the distribution of assets in the event of a
liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or
in the event of any other distribution of assets
of the Corporation among its shareholders for the
purpose of winding up its affairs
v. "Retraction Date" means any Business Day on which
the documents specified in section 5.3(a) are duly
tendered by a holder of Series II Preference
Shares in respect of the exercise of his or her
retraction right pursuant to Article 5; and
w. "Retraction Notice" has the meaning set out in
section 5.3(a).
<PAGE>
2.2 Election to Shorten the Initial Period
The Board shall be entitled to select a date prior to
November 8, 1999 (but not earlier than May 8, 1999) as the
Initial Period Expiry Date. If the Board elects to do so then at
least three Business Days prior to the Initial Period Expiry
Date, the Corporation shall issue a press release and on or
before the Initial Period Expiry Date the Corporation shall send
by prepaid first class mail or deliver a notice to all holders of
Series II Preference Shares each of which shall set out the
Determination Date, the Initial Period Expiry Date and the
Exchange Number as of the Initial Period Expiry Date. If the
Corporation intends to exercise its redemption right pursuant to
section 4.1 such press release and notice shall also set out the
information contemplated by section 4.1.2.
2.3. Dates
In the event that any date on which any dividend on the
Series II Preference Shares is payable by the Corporation, or on
or by which any other action is required to be taken by the
Corporation or the holders of Series II Preference Shares
hereunder, is not a Business Day, then such dividend shall be
payable, or such other action shall be required to be taken, on
or by the next succeeding date that is a Business Day.
2.4. Currency
All cash amounts paid by the Corporation in respect of the
Series II Preference Shares shall be made in Canadian dollars and
all references herein to monetary amounts shall be construed
accordingly.
3. DIVIDENDS
3.1. Payment of Dividends
The holders of the Series II Preference Shares shall be
entitled to receive, and the Corporation shall pay thereon, as
and when declared by the Board, subject to the insolvency
provisions of applicable law, cumulative preferential cash
dividends payable in lawful money of Canada as follows:
3.1.1. during the Initial Period, a fixed dividend of 7.00% per
annum of the issue price of $10.00 per share payable quarterly on
each third month anniversary of the date of original issue of
Series II Preference Shares; and
3.1.2. after the Initial Period, a dividend per share as follows:
a. in the case of a cash dividend or distribution
on Class A Common Shares having a record date
after the Determination Date, in an amount in
cash per Series II Preference Share equal to
the product of (i) the Canadian Dollar
Equivalent on the payment date thereof of such
cash dividend or distribution on each Class A
Common Share less any United States withholding
tax thereon payable by the Corporation or any
subsidiary thereof and (ii) the Exchange Number
as of the HII Dividend Declaration Date;
<PAGE>
b. in the case of a stock dividend or distribution
declared on a Class A Common Share to be paid in
Class A Common Shares having a record date after
the Determination Date in respect of which an
adjustment is not made pursuant to section 5.8, in
that number of Series II Preference Shares for
each Series II Preference Share equal to the
product of (i) the number of Class A Common Shares
to be paid on each Class A Common Share less any
United States withholding tax thereon payable by
the Corporation or any subsidiary thereof and (ii)
the Exchange Number as of the HII Dividend
Declaration Date; or
c. in the case of a dividend or distribution on the
Class A Common Shares to be paid in property other
than cash or Class A Common Shares having a record
date after the Determination Date in respect of
which an adjustment is not made pursuant to
section 5.8, in such type and amount of property
for each Series II Preference Share as is the same
as or economically equivalent to (to be determined
by the Board) the type and amount of property
declared as a dividend or distribution on the
Exchange Number (as of the HII Dividend
Declaration Date) of Class A Common Shares less
any United States withholding tax thereon payable
by the Corporation or any subsidiary thereof.
For any period during the Initial Period which is less
than a full quarter with respect to any Series II
Preference Share which is redeemed or in respect of
which assets of the Corporation are distributed to the
holders thereof pursuant to Article 8 during such
quarter, dividends shall be deemed to accrue on a daily
basis and shall be equal to the amount calculated by
multiplying $0.07 by a fraction of which the numerator
is the number of days in such period and the denominator
is the number of days in such quarter.
3.2. Method of Payment
a. Cheques payable in lawful money of Canada at any
branch in Canada of the Corporation's bankers
shall be issued in respect of any cash dividends
or distributions on the Series II Preference
Shares (less any tax required to be withheld by
the Corporation). The mailing, by prepaid first
class mail, of such a cheque to a holder of Series
II Preference Shares, shall be deemed to be
payment of the dividends represented thereby
unless the cheque is not paid upon presentation.
Dividends which are represented by a cheque which
has not been presented to the Corporation's
bankers for payment or that otherwise remain
unclaimed for a period of six years from the date
on which they were declared to be payable shall be
forfeited to the Corporation.
b. Certificates registered in the name of the
registered holder of Series II Preference
Shares shall be issued or transferred in
respect of any stock dividends or other
distribution on Series II Preference Shares
contemplated by section 3.2(b) hereof and the
sending of such a certificate to each holder of
a Series II Preference Share shall satisfy the
stock dividend or other distribution of Series
II Preference Shares represented thereby.
c. Such other type and amount of property in
respect of any dividends or distributions
contemplated by section 3.2(c) hereof shall be
issued, distributed or
<PAGE>
transferred by the Corporation in such manner
as it shall determine and the issuance,
distribution or transfer thereof by the
Corporation to each holder of a Series II
Preference Share shall satisfy the dividend or
distribution represented thereby.
d. Notwithstanding anything to the contrary herein
the Corporation shall pay to any shareholder
whose latest address as shown on the books of
the Corporation is not in Canada all dividends
in United States dollars unless any such
shareholder requests payment in Canadian
dollars. Any such payment in United States
dollars shall be in an amount equivalent to the
amount otherwise payable in Canadian dollars
converted to United States dollars at the Bank
of Canada noon rate of exchange on the
applicable dividend record date.
3.3. Record and Payment Dates
The record date for the determination of the
holders of Series II Preference Shares entitled to receive
payment of, and the payment date for, any dividend or
distribution declared on the Series II Preference Shares under
section 3.1.2 hereof shall be the same as the record date and
payment date, respectively, for the corresponding dividend or
distribution on the Class A Common Shares.
3.4. Partial Payment
If on any payment date for any dividends or
distributions declared on the Series II Preference Shares under
section 3.1 hereof the dividends or distributions are not paid in
full on all of the Series II Preference Shares then outstanding,
any such dividends or distributions that remain unpaid shall be
paid on a subsequent date or dates determined by the Board on
which the Corporation shall have sufficient money or other assets
properly applicable to the payment of such dividends or
distributions.
4. REDEMPTION
4.1. Optional Redemption at End of Initial Period
4.1.1. On the 30th day following the Initial Period
Expiry Date (the "Redemption Date"), subject to the
provisions of the Act, this Article 4 and to the rights,
privileges, restrictions and conditions attaching to any
shares of the Corporation ranking prior to the Series II
Preference Shares, the Corporation may, upon giving
notice as hereinafter provided, redeem all or any part
of the then outstanding Series II Preference Shares on
payment for each share to be redeemed of $10.00 together
with an amount equal to all dividends accrued and unpaid
thereon up to the Redemption Date (the whole
constituting and being herein referred to as the
"Redemption Price"). In the case of a redemption of less
than all of the Series II Preference Shares pursuant to
this section 4.1 the Corporation shall redeem as nearly
as practicable the same portion of Series II Preference
Shares held by each holder.
4.1.2. In case of redemption of Series II Preference
Shares pursuant to section 4.1, at least three Business
Days prior to the Initial Period Expiry Date the
Corporation shall issue a press release and on or before
the Initial Period Expiry Date the Corporation shall
send by prepaid first class mail or deliver a notice to
each person who at the date of mailing or
<PAGE>
delivery is a holder of Series II Preference Shares each
of which shall state that the Corporation intends to
redeem Series II Preference Shares pursuant to this
section 4.1 and set out the Redemption Price and
Redemption Date. Such notice shall be mailed or
delivered to each holder of Series II Preference Shares
to be redeemed at the last address of such holder as it
appears on the securities register of the Corporation,
or in the event of the address of any such holder not so
appearing, then to the last address of such holder known
to the Corporation. Accidental failure or omission to
give such notice to one or more holders shall not affect
the validity of such redemption, but if such failure or
omission is discovered notice as aforesaid shall be
given forthwith to such holder or holders and shall have
the same force and effect as if given in due time. The
press release shall also set out the portion of Series
II Preference Shares to be redeemed and the notice shall
also set out the number of Series II Preference Shares
held by the person to whom it is addressed which are to
be redeemed and the place or places in Canada at which
holders of Series II Preference Shares may present and
surrender the certificate or certificates representing
such shares for redemption.
On and after the Initial Period Expiry
Date, the Corporation shall pay or cause to be paid to
or to the order of the holders of the Series II
Preference Shares to be redeemed the Redemption Price of
such shares on presentation and surrender, at the
registered office of the Corporation or any other place
or places in Canada specified in the notice of
redemption, of the certificate or certificates
representing the Series II Preference Shares called for
redemption. Payment in respect of Series II Preference
Shares being redeemed shall be made by cheque payable to
the respective holders thereof in lawful money of Canada
at any branch in Canada of the Corporation's bankers. If
a part only of the Series II Preference Shares
represented by any certificate shall be redeemed, a new
certificate representing the balance of such shares
shall be issued to the holder thereof at the expense of
the Corporation upon presentation and surrender of the
first mentioned certificate.
The Corporation shall have the right,
at any time after the mailing or delivery of notice of
its intention to redeem Series II Preference Shares, to
deposit the Redemption Price of the Series II Preference
Shares so called for redemption, or of such of the
Series II Preference Shares which are represented by
certificates which have not, at the date of such
deposit, been surrendered by the holders thereof in
connection with such redemption, in a separate account
in any chartered bank or trust company in Canada named
in the redemption notice or in a subsequent notice in
writing to the holders of the Series II Preference
Shares in respect of which the deposit is made, to be
paid without interest to or to the order of the
respective holders of the Series II Preference Shares
called for redemption upon presentation and surrender to
such bank or trust company of the certificates
representing such shares. Upon such deposit being made
or upon the Redemption Date, whichever is the later, the
Series II Preference Shares in respect of which such
deposit shall have been made shall be deemed to be
redeemed and the rights of the holders thereof shall be
limited to receiving, without interest, the Redemption
Price of their respective Series II Preference Shares
being redeemed upon presentation and surrender of the
certificate or certificates representing such shares.
Any interest allowed on any such deposit shall belong to
the Corporation.
4.2. Optional Redemption Right on Receipt of Retraction Notice
4.2.1. On receipt of a retraction notice in respect of
Series II or Series II Preference Shares, Hollinger
shall be entitled to redeem all or any part of such
Series II or Series II Preference
<PAGE>
Shares for a cash payment equal to the Initial
Retraction Price or Exchange Price, as applicable, in
lieu of redeeming them. Hollinger shall exercise this
redemption right by sending or causing to be sent by
prepaid first class mail or delivering to the registered
holder of Series II or Series II Preference Shares to be
redeemed not later than five days after the Retraction
Date a notice that the Corporation will redeem that
number of Series II Preference Shares specified in such
notice pursuant to this section 4.2.
4.2.2. Hollinger shall exercise this redemption right so
that, subject to rules applicable to fractional shares,
all holders of Series II Preference Shares to be
redeemed on any date shall receive the same portion of
the Initial Retraction Price or Exchange Price, as
applicable, payable to them in the form of Class A
Common Shares and cash.
4.2.3. The Corporation shall redeem Series II Preference
Shares pursuant to this section 4.2 by sending or
causing to be sent to or to the order of the registered
holder thereof not later than 14 days after the
Retraction Date a cheque payable at any branch of the
Corporation's bankers for the Initial Retraction Price
or Exchange Price, as applicable, of such shares.
4.3. Cessation of Rights
Series II Preference Shares redeemed pursuant
to this Article 4 shall cease to be entitled to dividends or any
other participation in any distribution of the assets of the
Corporation and the holders thereof shall not be entitled to
exercise any of their other rights as shareholders in respect
thereof unless the payment to be made on redemption shall not be
made as required in which case the rights of the holders shall
remain unaffected. Redemption moneys which are represented by a
cheque which has not been presented to the Corporation's bankers
for payment or that otherwise remain unclaimed (including moneys
held on deposit in a separate account as provided for above) for
a period of six years from the date specified for redemption
shall be forfeited to the Corporation.
5. RETRACTION RIGHTS
5.1. Right of Retraction During Initial Period
At any time during the Initial Period a holder
of Series II Preference Shares shall be entitled, subject to the
provisions of the Act and in the manner hereinafter provided, to
require the Corporation to redeem all or any of the Series II
Preference Shares registered in the name of such holder in
consideration for the transfer to such holder of that number of
Class A Common Shares for each Series II Preference Share to be
redeemed equal to (i) $8.50 plus accrued and unpaid dividends per
Series II Preference Share to and including the Retraction Date
(the "Initial Retraction Price") divided by (ii) the Current
Class A Market Price on the Retraction Date.
5.2. Right of Retraction after Initial Period
At any time after the Initial Period, a holder
of Series II Preference Shares shall be entitled, subject to the
provisions of the Act and in the manner hereinafter provided, to
require the Corporation to redeem all or any of the Series II
Preference Shares registered in the name of the holder in
consideration for the transfer to such holder of that number of
Class A Common Shares for each Series II Preference Share to be
redeemed equal to (i) the Exchange Number on the
<PAGE>
Retraction Date plus (ii) the quotient obtained when the Dividend
Amount, if any, as of the date of transfer of such Class A Common
Shares to such holder on the Hollinger International register is
divided by the Current Class A Market Price on such date.
5.3. Retraction Procedure
a. Series II Preference Shares may be retracted only
by the registered holder thereof presenting and
surrendering to the Corporation, at any place
where the Series II Preference Shares may be
transferred or at such other place or places as
shall be specified in writing by the Corporation
to the holders of the Series II Preference Shares
from time to time, the share certificate or
certificates representing the Series II Preference
Shares to be redeemed, duly completed and endorsed
in the manner prescribed thereon, together with a
request in writing in such form as may be
acceptable to the Corporation (in this section
5.3, the "Retraction Notice") from such holder
specifying the number of Series II Preference
Shares to be redeemed by the Corporation.
b. Subject to sections 4.2, 5.5 and 5.6 hereof, the
Corporation shall redeem the appropriate number of
Retractable Shares by sending or causing to be
sent to or to the order of the registered holder
thereof not later than 14 days after the
Retraction Date a certificate representing that
number of Class A Common Shares to which the
holder is entitled.
c. If less than all of the Series II Preference
Shares represented by any certificate or
certificates so endorsed are to be redeemed, the
Corporation shall issue and deliver to such
holder, at the expense of the Corporation, a new
share certificate representing the Series II
Preference Shares which are not being surrendered
for retraction.
5.4. Election Irrevocable
Subject to paragraph 5.6 hereof, the election
by a registered holder of Series II Preference Shares to
surrender any Series II Preference Shares for retraction shall be
irrevocable upon receipt by the Corporation at its registered
office of the Retraction Notice and the certificate or
certificates representing the Series II Preference Shares to be
redeemed; provided that the Corporation may, in its unfettered
discretion, permit withdrawal of any such election at any time
prior to payment of the Initial Retraction Price for the Series
II Preference Shares to be redeemed.
5.5. Relating to the Delivery of Class A Common Shares
5.5.1. Qualification and Listing
The Corporation's shall satisfy the following
conditions in respect of Class A Common Shares delivered
on a redemption of Series II Preference Shares:
a. the qualification of the Class A Common Shares
by the filing of a prospectus and obtaining a
final receipt therefor from the securities
regulatory authorities in each of the provinces
of Canada in which the distribution of such
Class A Common
<PAGE>
Shares occurs, unless there exists an
applicable exemption to qualification
thereunder that allows such Class A Common
Shares (other than those issued to a person who
is in a position by himself or in combination
with others to materially affect control of the
Corporation) to be immediately traded free of
resale restrictions under applicable securities
legislation; and
b. the effectiveness of a registration statement
under the U.S. Securities Act of 1933 ("U.S.
Securities Act") with respect to the delivery
of such Class A Common Shares, unless an
exemption from the registration requirements of
the U.S. Securities Act is available which
would allow such Class A Common Shares to be
immediately traded free of resale restrictions;
and
c. the listing of such Class A Common Shares on
each stock exchange on which the Class A Common
Shares are then listed.
5.5.2. Fractions of Class A Common Shares
The Corporation shall not deliver a
fraction of a Class A Common Share on redemption of
Series II Preference Shares. In lieu thereof, the
Corporation shall make a cash payment equal to the
amount which would have been satisfied by the fraction
of the Class A Common Share.
5.6. Retraction Limitation
a. If the redemption by the Corporation of all Series
II Preference Shares surrendered for retraction on
a Retraction Date would be contrary to applicable
law, the Corporation shall redeem only the maximum
number of Series II Preference Shares which it is
then permitted to redeem selected pro rata
(disregarding fractions of shares) from the Series
II Preference Shares surrendered for retraction
according to the number of Series II Preference
Shares surrendered for retraction by each holder
thereof. Thereupon, each such holder shall be
entitled, by notice to the Corporation to withdraw
all or part only of the Series II Preference
Shares surrendered by such holder for retraction
on such Retraction Date which have not been
redeemed by the Corporation and the Corporation
shall, at its expense, issue and deliver to each
holder who exercises such right of withdrawal a
new share certificate representing the Series II
Preference Shares so withdrawn. Thereafter, the
Corporation shall redeem on a date or dates
determined by the Board on which the Corporation
shall have sufficient assets to permit such
redemption, the maximum number of Series II
Preference Shares as have been surrendered for
retraction and not withdrawn or redeemed which the
Corporation determines it is then permitted to
redeem, selected pro rata (disregarding fractions
of shares) from such Series II Preference Shares
according to the number of such Series II
Preference Shares then held by each holder thereof
and so on until all such Series II Preference
Shares have been redeemed.
b. If the Board has acted in good faith in making any
of the determinations referred to in paragraph
5.6(a) hereof, the Board and the Corporation shall
have no liability if such determination proves to
be inaccurate.
<PAGE>
c. If the Corporation does not redeem all Series
II Preference Shares surrendered for retraction
on a Retraction Date the Corporation shall
forthwith after such date notify each holder
whose Series II Preference Shares have not been
redeemed on such date of such holder's right to
withdraw the Series II Preference Shares
surrendered and not redeemed by the
Corporation.
5.7. Cessation of Rights
Series II Preference Shares redeemed pursuant
to this Article 5 shall cease to be entitled to dividends or any
other participation in any distribution of the assets of the
Corporation and the holders thereof shall not be entitled to
exercise any of their other rights as shareholders in respect
thereof as of the date on which Class A Common Shares deliverable
to them on redemption are transferred to them on the Hollinger
International register.
5.8. Changes Affecting the Class A Common Shares
5.8.1. If and whenever at any time after the
Determination Date, Hollinger International:
a. subdivides its outstanding Class A Common
Shares into a greater number of Class A Common
Shares (including by way of a stock dividend
which the Board decides to treat as a
subdivision); or
b. consolidates its outstanding Class A Common
Shares into a smaller number of Class A Common
Shares,
then the Exchange Number will be adjusted
effective immediately after the effective date
or record date for such event by multiplying
the Exchange Number in effect immediately prior
to such effective date or record date by a
fraction, the numerator of which will be the
number of Class A Common Shares outstanding
immediately after giving effect to such event
and the denominator of which will be the number
of Class A Common Shares outstanding on such
effective date or record date before giving
effect to such event.
5.8.2. If and whenever at any time after the date
hereof, there is a reclassification of the Class A
Common Shares at any time outstanding or change of the
Class A Common Shares into other shares or into other
securities or other capital reorganization (other than
an event described in section 5.8.1), or a
consolidation, amalgamation, arrangement or merger of
Hollinger International with or into any other
corporation or other entity (other than a consolidation,
amalgamation, arrangement or merger which does not
result in any reclassification of the outstanding Class
A Common Shares or a change of the Class A Common Shares
into other shares), or a transfer of the undertaking or
assets of Hollinger
<PAGE>
International as an entirety or substantially as an
entirety to another corporation or other entity in which
the holders of Class A Common Shares are entitled to
receive shares, other securities or other property (any
of such events being called an "Hollinger International
Capital Reorganization"), a holder of Series II
Preference Shares will be entitled to receive on
exercise of his or her retraction right pursuant to
section 5.2, and shall accept in lieu of Class A Common
Shares, the aggregate number of shares, other securities
or other property which such holder would have been
entitled to receive as a result of such Hollinger
International Capital Reorganization if, on the
effective date thereof, the holder had been the
registered holder of the number of Class A Common Shares
which such holder would have received if the Retraction
Date were immediately prior to such effective date,
subject in all such cases, to the Corporation's right to
redeem Series II Preference Shares pursuant to section
4.2. If determined appropriate by the Board, appropriate
adjustments will be made as a result of any such
Hollinger International Capital Reorganization in the
application of the provisions set forth in this Article
with respect to the rights and interests thereafter of
holders of Series II Preference Shares to the end that
the provisions set forth in this Article will thereafter
correspondingly be made applicable as nearly as may
reasonably be in relation to any shares, other
securities or other property thereafter deliverable upon
the exercise of any Series II Preference Shares.
5.8.3. If and whenever at any time after the date hereof
Hollinger International takes any action affecting the
Class A Common Shares other than an action described in
sections 3.1.2, 5.8.1 or 5.8.2 which in the opinion of
the Board would materially affect the rights of the
holders of Series II Preference Shares, the Exchange
Number or other terms of Article 5 will be adjusted in
such manner, if any, and at such time, by action by the
Board, in their sole discretion, as they may determine
to be equitable in the circumstances, but subject in all
cases to any necessary regulatory approvals, including
any approval required by any stock exchange on which the
Series II Preference Shares may be listed. Failure of
the taking of action by the Board so as to provide for
an adjustment on or prior to the effective date of any
such action will be conclusive evidence that the Board
have determined that it is equitable to make no
adjustment in the circumstances.
5.9. Rules Applicable to Adjustments
For the purposes of section 5.8:
5.9.1. The adjustments provided for in section 5.8 are
cumulative and will be made successively whenever an
event referred to therein occurs, subject to the
following subsections of this section.
5.9.2. No adjustment of the Exchange Number will be
required unless such adjustment would result in a change
of at least 1%; provided, however, that any adjustments
which, except for the provisions of this subsection
would otherwise have been required to be made, will be
carried forward and taken into account in any subsequent
adjustment.
5.9.3. If at any time a dispute arises with respect to
adjustments such dispute will be conclusively determined
by the Corporation's auditors or if they are unable or
unwilling to act, by such other firm of independent
chartered accountants as may be selected by action by
the Board and any such determination will be binding
upon the Corporation and the holders of Series II
Preference Shares; such auditors or accountants will be
given access to
<PAGE>
all necessary records of the Corporation.
5.9.4 If Hollinger International sets a record date to
determine the holders of Class A Common Shares to take
any action and thereafter and before the taking of such
action, legally abandons its plan to take such other
action, then no adjustment will be required by reason of
the setting of such record date.
5.9.5. No adjustment need be made for a transaction
referred to in section 5.8 if holders of Series II
Preference Shares participate in the transaction on a
basis and with notice that the Board determines to be
fair and appropriate in the circumstances.
6. VOTING RIGHTS
6.1. Except as herein referred to or as required by law, the
holders of the Series II Preference Shares as a series shall not
be entitled as such to receive notice of, to attend or to vote at
any meeting of the shareholders of the Corporation.
7. RESTRICTIONS ON DIVIDENDS AND RETIREMENT OF SHARES
7.1. So long as any of the Series II Preference Shares are
outstanding, the Corporation shall not, without the approval of
the holders of the Series II Preference Shares given as
hereinafter specified:
7.1.1. declare, pay or set apart for payment any
dividends on any junior shares (other than dividends
payable in shares of the Corporation ranking as to
capital and dividends junior to the Series II Preference
Shares);
7.1.2. call for redemption, redeem, purchase or
otherwise pay off or retire for value, or make any
capital distributions in respect of, any junior shares;
7.1.3. except in connection with the redemption of
Series II Preference Shares pursuant to Articles 4 or 5,
call for redemption, redeem, purchase or otherwise pay
off or retire for value, or make any capital
distribution in respect of, less than all of the Series
II Preference Shares;
7.1.4. call for redemption, redeem, purchase or
otherwise pay off or retire for value, or make any
capital distribution in respect of, any shares ranking
as to capital or dividends on a parity with the Series
II Preference Shares except in connection with the
retirement thereof pursuant to a retraction privilege
attaching thereto; or
7.1.5. issue any shares ranking as to capital or
dividends prior to or on a parity with the Series II
Preference Shares;
unless, in each such case, (i) all dividends on the Series II
Preference Shares then outstanding and on all other shares of the
Corporation ranking as to dividends prior to or on a parity with
the Series II Preference Shares which have accrued up to and
including the dividends payable on the immediately preceding
respective date or dates for the payment of dividends thereon
shall have been
<PAGE>
declared and paid or set apart for payment, (ii) the Corporation
shall have redeemed all of the Series II Preference Shares
tendered for redemption pursuant to Article 5, and (iii) the
Corporation is not otherwise in default under the rights,
privileges, restrictions and conditions attached to the Series II
Preference Shares or any other shares of the Corporation ranking
as to dividends or as to capital prior to or on a parity with the
Series II Preference Shares.
8. LIQUIDATION, DISSOLUTION OR WINDING-UP
8.1. In the event of the liquidation, dissolution or winding-up
of the Corporation, whether voluntary or involuntary, or in the
event of any other distribution of assets of the Corporation
among its shareholders for the purpose of winding up its affairs
(any such event being herein referred to as a "Liquidation
Event"), the holders of the Series II Preference Shares shall be
entitled to receive from the assets of the Corporation the
following amount:
a. if the Liquidation Event occurs during the Initial
Period, a sum equal to $10.00 for each Series II
Preference Share held by them respectively, plus
an amount equal to all dividends accrued and
unpaid thereon up to the date of payment; and
b. if the Liquidation Event occurs after the Initial
Period, an amount per share equal to (i) the
Current Class A Market Price on the date of the
Liquidation Event of the Exchange Number of Class
A Common Shares (the "Liquidation Price") which
shall be satisfied in full by the Corporation
causing to be delivered to such holder the
Exchange Number of Class A Common Shares for each
Series II Preference Share or, at the option of
the Corporation, by payment in lawful money of
Canada of the Liquidation Price, plus (ii) the
Dividend Amount, if any, on the date of transfer
of such Class A Common Shares to such holder.
The whole of such amounts shall be paid before any amount shall
be paid by the Corporation or any assets of the Corporation shall
be distributed to holders of shares of any class of the
Corporation ranking as to capital junior to the Series II
Preference Shares. After payment to the holders of the Series II
Preference Shares of the amounts so payable to them, they shall
not be entitled to share in any further distribution of the
assets of the Corporation.
9. AMENDMENT
9.1. The rights, privileges, restrictions and conditions attached
to the Series II Preference Shares may be added to, changed or
removed by Articles of Amendment, but only with the approval of
the holders of the Series II Preference Shares given as
hereinafter specified in addition to any vote or authorization
required by law.
10. APPROVAL OF HOLDERS OF THE SERIES I PREFERENCE
SHARES
10.1. The approval of the holders of the Series II Preference
Shares to add to, change or remove any right, privilege,
restriction or condition attaching to the Series II Preference
Shares as a series or in respect of any other matter requiring
the consent of the holders of the Series II Preference Shares may
be given in such manner as may then be required by law, subject
to a minimum requirement that such approval be given by
resolution signed by all the holders of the
<PAGE>
Series II Preference Shares or passed by the affirmative vote of
at least 2/3 of the votes cast at a meeting of the holders of the
Series II Preference Shares duly called for that purpose.
The formalities to be observed with respect to
the giving of notice of any such meeting or any adjourned
meeting, the quorum required therefor and the conduct thereof
shall be those from time to time prescribed by the by-laws of the
Corporation with respect to meetings of shareholders or if not so
prescribed, as required by the Act in force at the time of the
meeting or as otherwise required by law. On every poll taken at
every meeting of holders of Series II Preference Shares as a
series, each holder of Series II Preference Shares entitled to
vote thereat shall have one vote in respect of each Series II
Preference Share held.
